Exam 17: Foreign Direct Investment Theory and Strategy

Local partners in a foreign country and in a joint venture with an MNE are likely to make decisions that maximize the value of the subsidiary. Such actions probably will not maximize the value of the entire firm.

Which of the following is NOT a potential disadvantage of licensing relative to FDI?

The owner-specific advantages of OLI must be ________.

FDI is

Which of the following modes of serving foreign markets requires the least capital investment by the MNE but risks the loss of key technological or managerial expertise to the marketplace?

Joint ventures are motivated only by takeover defenses.

Which of the following is NOT a form of FDI?

The OLI paradigm is an attempt to create a framework to explain why MNEs choose ________ rather than some other form of international venture.

With licensing the ________ is likely to be lower than with FDI because of lower profits; however, the ________ is likely to be higher due to a greater return per dollar invested.

Joint ventures are a more common FDI than wholly owned subsidiaries.

All of the following may be justification for a strategic alliance EXCEPT:

MNEs typically used licensing with independent firms rather than with their own foreign subsidiaries.

A MNE can choose all of the following modes of entry for FDI EXCEPT:

Licensing is a popular form of foreign investment because it does not need a sizable commitment of funds, and political risk is often minimized.

Which of the following is an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Which of the following is NOT an advantage to a joint venture?

A/n ________ would be an example of an owner-specific advantage for an MNE.

A ________ is establishing a production or service facility from the ground up.

Which of the following is NOT a potential advantage to a cross-border acquisition compared to a Greenfield investment?

The authors cite China-based Haier as an example of a firm following the strategy of ________. Haier is shown to have firmly established themselves as the top producer of home appliances in China and then using their economies of scale in an attempt to gain market share globally.