Question 1

Which of the following best exemplifies corporate social responsibility?

Accepted Answer

A)  a computer firm charging a high fee for recycling old computers 
B)  an automobile manufacturer selling low-fuel economy cars and trucks 
C)  a telecommunications firm charging high rates to low-income customers 
D)  an automotive battery firm offering free technical training to students of a deprived community 
A)  a computer firm charging a high fee for recycling old computers 
B)  an automobile manufacturer selling low-fuel economy cars and trucks 
C)  a telecommunications firm charging high rates to low-income customers 
D)  an automotive battery firm offering free technical training to students of a deprived community D

Question 2

International Business Class (Scenario)
Students in Professor Manning's international business class have been assigned the task of explaining the different types of FDI. Professor Manning formed groups among students. The groups are to research their assigned topic and present their information to the class using examples of real-world firms for illustration. Jessica Hanson is the leader of Group A; Manu Patel is the leader of Group B; and Mario Witherspoon is the leader of Group C.
-During his presentation, Manu describes how a large U.S. retailer entered the Mexican market by purchasing the stores and assets of a Mexican retailer. Which of the following topics was most likely assigned to Group B?

Accepted Answer

A)  merger 
B)  turnkey operation 
C)  acquisition 
D)  collaborative venture 
A)  merger 
B)  turnkey operation 
C)  acquisition 
D)  collaborative venture C

Question 3

Explain why FDI is a particularly risky foreign entry strategy. How is FDI different from international portfolio investment?

Accepted Answer

Foreign direct investment (FDI) is an internationalization strategy where the firm establishes a physical presence abroad through direct ownership of productive assets such as capital, technology, labor, land, plant, and equipment.
FDI is the most advanced and complex foreign market entry strategy. It entails establishing manufacturing plants, marketing subsidiaries, or other facilities in target countries. Because this involves investing substantial resources to establish a physical presence abroad, FDI is riskier than other entry strategies.
International portfolio investment refers to passive ownership of foreign securities, such as stocks and bonds, for the purpose of generating financial returns. International portfolio investment is a form of international investment, but it is not FDI, which seeks ownership control of a business abroad and represents a long-term commitment. The United Nations uses the benchmark of at least 10 percent ownership in the enterprise to differentiate FDI from portfolio investment. However, this percentage may be misleading, because control is not usually achieved unless the investor owns at least 50 percent of a foreign venture.

Question 4

Which of the following is an example of a market-seeking motive for FDI?

Accepted Answer

A)  a firm wishes to gain access to raw materials 
B)  a firm follows its key customers abroad 
C)  a company wishes to gain access to knowledge 
D)  a company intends to avoid trade barriers 
A)  a firm wishes to gain access to raw materials 
B)  a firm follows its key customers abroad 
C)  a company wishes to gain access to knowledge 
D)  a company intends to avoid trade barriers

Question 5

Home Depot made an acquisition investment when it entered the Mexican market by purchasing Home Mart, a domestic store chain.

Accepted Answer

A) True 
 B)False

Question 6

Companies often enter markets through FDI to avoid tariffs and other trade barriers because these usually apply only to exporting.

Accepted Answer

A) True 
 B)False

Question 7

Foreign direct investment is the highest risk entry strategy.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm?

Accepted Answer

A)  The foreign firm can fill an important gap in the focal firm's value chain. 
B)  The foreign firm requires the focal firm's financial resources to compete locally as well. 
C)  The focal firm wants to duplicate a competitor's marketing strategies abroad. 
D)  The market abroad is saturated; there is no scope for the focal firm's products or services. 
A)  The foreign firm can fill an important gap in the focal firm's value chain. 
B)  The foreign firm requires the focal firm's financial resources to compete locally as well. 
C)  The focal firm wants to duplicate a competitor's marketing strategies abroad. 
D)  The market abroad is saturated; there is no scope for the focal firm's products or services.

Question 9

International portfolio investment refers to passive ownership of foreign securities.

Accepted Answer

A) True 
 B)False

Question 10

International Business Class (Scenario)
Students in Professor Manning's international business class have been assigned the task of explaining the different types of FDI. Professor Manning formed groups among students. The groups are to research their assigned topic and present their information to the class using examples of real-world firms for illustration. Jessica Hanson is the leader of Group A; Manu Patel is the leader of Group B; and Mario Witherspoon is the leader of Group C.
-During his presentation, Mario describes how a large Japanese automaker built a factory in Kentucky. Which of the following topics was most likely assigned to Group C?

Accepted Answer

A)  horizontal integration 
B)  equity joint venture 
C)  greenfield investment 
D)  consortium 
A)  horizontal integration 
B)  equity joint venture 
C)  greenfield investment 
D)  consortium

Question 11

Which of the following is a disadvantage of equity joint ventures?

Accepted Answer

A)  termination difficulties 
B)  lesser control over future directions 
C)  imbalanced relationship 
D)  vague contractual partnership 
A)  termination difficulties 
B)  lesser control over future directions 
C)  imbalanced relationship 
D)  vague contractual partnership

Question 12

Host-country governments often pressure MNEs to undertake acquisition over greenfield investments.

Accepted Answer

A) True 
 B)False

Question 13

In the fashion industry, customer needs change rapidly and managers often locate factories or assembly operations near important customers.

Accepted Answer

A) True 
 B)False

Question 14

In the context of attaining economies of scope, using individual managers in each European country is more efficient that using the same base of managers all over Europe.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a trend seen in the modern international economy?

Accepted Answer

A)  Firms from both advanced and emerging economies employ FDI. 
B)  Emerging markets are the sole recipient countries for FDI. 
C)  Companies primarily use acquisitions to enter foreign markets. 
D)  Firms in the service sector use e-commerce exclusively to enter foreign markets. 
A)  Firms from both advanced and emerging economies employ FDI. 
B)  Emerging markets are the sole recipient countries for FDI. 
C)  Companies primarily use acquisitions to enter foreign markets. 
D)  Firms in the service sector use e-commerce exclusively to enter foreign markets.

Question 16

A firm that pursues a collaborative venture to access raw materials is demonstrating a(n) ________ motive.

Accepted Answer

A)  efficiency-seeking 
B)  novelty-seeking 
C)  asset-seeking 
D)  market-seeking 
A)  efficiency-seeking 
B)  novelty-seeking 
C)  asset-seeking 
D)  market-seeking

Question 17

A firm that builds a new manufacturing facility in a foreign market is participating in a(n) ________.

Accepted Answer

A)  acquisition 
B)  merger 
C)  greenfield investment 
D)  equity participation 
A)  acquisition 
B)  merger 
C)  greenfield investment 
D)  equity participation

Question 18

What makes China popular for FDI? What factors contribute to the long-term popularity of FDI in advanced economies?

Accepted Answer

According to A. T. Kearney's FDI Confide

Question 19

A new legal entity is created during the formation of a project-based, nonequity venture.

Accepted Answer

A) True 
 B)False

Question 20

The level of taxes in a country is a part of the ________ factor that is considered when selecting an FDI location.

Accepted Answer

A)  political 
B)  profit retention 
C)  market 
D)  infrastructural 
A)  political 
B)  profit retention 
C)  market 
D)  infrastructural

Which of the following best exemplifies corporate social responsibility?

Explain why FDI is a particularly risky foreign entry strategy. How is FDI different from international portfolio investment?

Which of the following is an example of a market-seeking motive for FDI?

Home Depot made an acquisition investment when it entered the Mexican market by purchasing Home Mart, a domestic store chain.

Companies often enter markets through FDI to avoid tariffs and other trade barriers because these usually apply only to exporting.

Foreign direct investment is the highest risk entry strategy.

Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm?

International portfolio investment refers to passive ownership of foreign securities.

Which of the following is a disadvantage of equity joint ventures?

Host-country governments often pressure MNEs to undertake acquisition over greenfield investments.

In the fashion industry, customer needs change rapidly and managers often locate factories or assembly operations near important customers.

In the context of attaining economies of scope, using individual managers in each European country is more efficient that using the same base of managers all over Europe.

Which of the following is a trend seen in the modern international economy?

A firm that pursues a collaborative venture to access raw materials is demonstrating a(n) ________ motive.

A firm that builds a new manufacturing facility in a foreign market is participating in a(n) ________.

What makes China popular for FDI? What factors contribute to the long-term popularity of FDI in advanced economies?

A new legal entity is created during the formation of a project-based, nonequity venture.

The level of taxes in a country is a part of the ________ factor that is considered when selecting an FDI location.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Licensing, Franchising, and Other Contractual Strategies

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters

Exam 14: Foreign Direct Investment and Collaborative Ventures

Which of the following best exemplifies corporate social responsibility?

Explain why FDI is a particularly risky foreign entry strategy. How is FDI different from international portfolio investment?

Which of the following is an example of a market-seeking motive for FDI?

Home Depot made an acquisition investment when it entered the Mexican market by purchasing Home Mart, a domestic store chain.

Companies often enter markets through FDI to avoid tariffs and other trade barriers because these usually apply only to exporting.

Foreign direct investment is the highest risk entry strategy.

Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm?

International portfolio investment refers to passive ownership of foreign securities.

Which of the following is a disadvantage of equity joint ventures?

Host-country governments often pressure MNEs to undertake acquisition over greenfield investments.

In the fashion industry, customer needs change rapidly and managers often locate factories or assembly operations near important customers.

In the context of attaining economies of scope, using individual managers in each European country is more efficient that using the same base of managers all over Europe.

Which of the following is a trend seen in the modern international economy?

A firm that pursues a collaborative venture to access raw materials is demonstrating a(n) ________ motive.

A firm that builds a new manufacturing facility in a foreign market is participating in a(n) ________.

What makes China popular for FDI? What factors contribute to the long-term popularity of FDI in advanced economies?

A new legal entity is created during the formation of a project-based, nonequity venture.

The level of taxes in a country is a part of the ________ factor that is considered when selecting an FDI location.

Introduction: What Is International Business

Globalization of Markets and the Internationalization of the Firm

The Cultural Environment of International Business

Ethics, Corporate Social Responsibility, Sustainability and Corporate Governance in International Business

Theories of International Trade and Investment

Political and Legal Systems in National Environments

Government Intervention and Regional Economic Integration

Understanding Emerging Markets

The International Monetary and Financial Environment

Financial Management and Accounting in the Global Firm

Strategy and Organization in the International Firm

Global Market Opportunity Assessment

Exporting and Global Sourcing

Licensing, Franchising, and Other Contractual Strategies

Marketing in the Global Firm

Human Resource Management in the Global Firm

Filters