Question 1

The share of FDI-based value added of foreign affiliates of MNEs in world GDP rose from 7% in 1990 to 11% in 2010.

Accepted Answer

A) True 
 B)False  True

Question 2

Explain the location advantages of FDI. Discuss the value of acquiring and neutralizing location advantages with an example that highlights how a location advantage does not necessarily overlap a country-level advantage.

Accepted Answer

Location advantages arise from the clustering of economic activities in certain locations, referred to as agglomeration. Agglomeration advantages stem from: 1. Knowledge spillovers among closely located firms that attempt to hire individuals from competitors. 2. Industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region. 3. Industry demand that facilitates a pool of specialized suppliers and buyers also located in the region. It is important to recognize that location advantages refer to advantages a firm obtains when operating in one geographic location due to its firm-level advantages. When you consider the resource-based view, there is evidence that location advantages do not entirely overlap with country-level advantages. An example is the development of the Fremont, California, automobile plant. GM ran this plant to the ground, resulting in closure. Then GM and Toyota reopened the facility in a joint venture, which leveraged the plant s location advantages by producing award-winning autos. The secret to the success is both parties agreed to be more innovative.

Question 3

MNEs possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI refer to:

Accepted Answer

A)  Location advantage 
B)  Ownership advantage 
C)  Internalization 
D)  Market imperfections 
A)  Location advantage 
B)  Ownership advantage 
C)  Internalization 
D)  Market imperfections B

Question 4

Which of the following statements is correct?

Accepted Answer

A)  Capital inflow can help improve a host country s balance of payments. 
B)  Technology, especially more advanced technology from abroad, can create technology spillovers. 
C)  FDI creates jobs directly and indirectly. 
D)  All of these answers are correct. 
A)  Capital inflow can help improve a host country s balance of payments. 
B)  Technology, especially more advanced technology from abroad, can create technology spillovers. 
C)  FDI creates jobs directly and indirectly. 
D)  All of these answers are correct.

Question 5

When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:

Accepted Answer

A)  Create knowledge spillover 
B)  Discover a new market for its goods 
C)  Overcome and combat market failure through FDI 
D)  Acquire location advantages or neutralize the first mover s location advantages 
A)  Create knowledge spillover 
B)  Discover a new market for its goods 
C)  Overcome and combat market failure through FDI 
D)  Acquire location advantages or neutralize the first mover s location advantages

Question 6

Firms prefer FDI to licensing because:

Accepted Answer

A)  FDI reduces dissemination risks. 
B)  FDI provides tight control over foreign operations. 
C)  Certain know-how is difficult to convey without FDI. 
D)  All of these answers 
A)  FDI reduces dissemination risks. 
B)  FDI provides tight control over foreign operations. 
C)  Certain know-how is difficult to convey without FDI. 
D)  All of these answers

Question 7

Identify the benefits and costs of FDI to home countries.

Accepted Answer

There are three benefits to home countri

Question 8

Agglomeration advantages stem from:

Accepted Answer

A)  Knowledge spillovers among closely located firms that attempt to hire individuals from competitors. 
B)  Industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region. 
C)  Industry demand that facilitates a pool of specialized suppliers and buyers also located in the region. 
D)  All of these answers 
A)  Knowledge spillovers among closely located firms that attempt to hire individuals from competitors. 
B)  Industry demand that creates a skilled labor force whose members may work for different firms without having to move out of the region. 
C)  Industry demand that facilitates a pool of specialized suppliers and buyers also located in the region. 
D)  All of these answers

Question 9

Most countries practice a totally free market view.

Accepted Answer

A) True 
 B)False

Question 10

State-owned investment funds have brought much needed cash to desperate Western firms, but some host countries have raised concerns about them.

Accepted Answer

A) True 
 B)False

Question 11

The resource-based view argues that recent expansion of FDI is indicative of generally friendlier policies, norms, and values associated with FDI.

Accepted Answer

A) True 
 B)False

Question 12

What determines the success and failure of FDI around the globe?

Accepted Answer

First, from a resource-based view, some

Question 13

What is a sovereign wealth fund?

Accepted Answer

A)  A philanthropic organization funded by foreign investors 
B)  A state-owned investment fund funded by foreign exchange assets 
C)  An FDI-oriented political action committee 
D)  An open source licensing agreement 
A)  A philanthropic organization funded by foreign investors 
B)  A state-owned investment fund funded by foreign exchange assets 
C)  An FDI-oriented political action committee 
D)  An open source licensing agreement

Question 14

A political view that is hostile to FDI is called horizontal FDI.

Accepted Answer

A) True 
 B)False

Question 15

Vertical FDI refers to producing the same products or offering the same services in a host country as firms do at home.

Accepted Answer

A) True 
 B)False

Question 16

Costs of FDI to home countries primarily center on:

Accepted Answer

A)  Capital loss 
B)  Job loss 
C)  Capital and job loss 
D)  Firm s bankruptcy 
A)  Capital loss 
B)  Job loss 
C)  Capital and job loss 
D)  Firm s bankruptcy

Question 17

Since the 1980s, countries such as Brazil, China, Hungary, India, Ireland, and Russia have adopted:

Accepted Answer

A)  Economic patriotism 
B)  FDI-friendly policies 
C)  A radical view 
D)  A strictly free market view 
A)  Economic patriotism 
B)  FDI-friendly policies 
C)  A radical view 
D)  A strictly free market view

Question 18

A political view that approves FDI only when its benefit outweighs its costs is known as:

Accepted Answer

A)  A free market view 
B)  The radical view 
C)  Pragmatic nationalism 
D)  Economic patriotism 
A)  A free market view 
B)  The radical view 
C)  Pragmatic nationalism 
D)  Economic patriotism

Question 19

Markets governed by rules, regulation, and norms are designed to reduce costs associated with doing business.

Accepted Answer

A) True 
 B)False

Question 20

FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.

Accepted Answer

A) True 
 B)False

The share of FDI-based value added of foreign affiliates of MNEs in world GDP rose from 7% in 1990 to 11% in 2010.

Explain the location advantages of FDI. Discuss the value of acquiring and neutralizing location advantages with an example that highlights how a location advantage does not necessarily overlap a country-level advantage.

MNEs possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI refer to:

Which of the following statements is correct?

When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:

Firms prefer FDI to licensing because:

Identify the benefits and costs of FDI to home countries.

Agglomeration advantages stem from:

Most countries practice a totally free market view.

State-owned investment funds have brought much needed cash to desperate Western firms, but some host countries have raised concerns about them.

The resource-based view argues that recent expansion of FDI is indicative of generally friendlier policies, norms, and values associated with FDI.

What determines the success and failure of FDI around the globe?

What is a sovereign wealth fund?

A political view that is hostile to FDI is called horizontal FDI.

Vertical FDI refers to producing the same products or offering the same services in a host country as firms do at home.

Costs of FDI to home countries primarily center on:

Since the 1980s, countries such as Brazil, China, Hungary, India, Ireland, and Russia have adopted:

A political view that approves FDI only when its benefit outweighs its costs is known as:

Markets governed by rules, regulation, and norms are designed to reduce costs associated with doing business.

FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.

Globalizing Business

Understanding Formal Institutions: Politics, Laws, and Economics

Emphasizing Informal Institutions: Cultures, Ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Dealing With Foreign Exchange

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing, Structuring, and Learning Around the World

Competing on Marketing and Supply Chain Management

Filters

Exam 6: Investing Abroad Directly

The share of FDI-based value added of foreign affiliates of MNEs in world GDP rose from 7% in 1990 to 11% in 2010.

Explain the location advantages of FDI. Discuss the value of acquiring and neutralizing location advantages with an example that highlights how a location advantage does not necessarily overlap a country-level advantage.

MNEs possession and leveraging of certain valuable, rare, hard-to-imitate, and organizationally embedded (VRIO) assets overseas in the context of FDI refer to:

Which of the following statements is correct?

When one firm enters a foreign country through FDI, its rivals are likely to follow by undertaking additional FDI in a host country to:

Firms prefer FDI to licensing because:

Identify the benefits and costs of FDI to home countries.

Agglomeration advantages stem from:

Most countries practice a totally free market view.

State-owned investment funds have brought much needed cash to desperate Western firms, but some host countries have raised concerns about them.

The resource-based view argues that recent expansion of FDI is indicative of generally friendlier policies, norms, and values associated with FDI.

What determines the success and failure of FDI around the globe?

What is a sovereign wealth fund?

A political view that is hostile to FDI is called horizontal FDI.

Vertical FDI refers to producing the same products or offering the same services in a host country as firms do at home.

Costs of FDI to home countries primarily center on:

Since the 1980s, countries such as Brazil, China, Hungary, India, Ireland, and Russia have adopted:

A political view that approves FDI only when its benefit outweighs its costs is known as:

Markets governed by rules, regulation, and norms are designed to reduce costs associated with doing business.

FDI may be viewed as a reflection of firm motivation to extend firm-specific capabilities abroad and their responses to overcome imperfections and failures.

Globalizing Business

Understanding Formal Institutions: Politics, Laws, and Economics

Emphasizing Informal Institutions: Cultures, Ethics, and Norms

Leveraging Resources and Capabilities

Trading Internationally

Dealing With Foreign Exchange

Capitalizing on Global and Regional Integration

Growing and Internationalizing the Entrepreneurial Firm

Entering Foreign Markets

Managing Global Competitive Dynamics

Making Alliances and Acquisitions Work

Strategizing, Structuring, and Learning Around the World

Competing on Marketing and Supply Chain Management

Filters