Question 1

Which of the following is NOT a strategy employed by the firms included in the text list of emerging market MNEs?

Accepted Answer

A)  engineering to innovation 
B)  exporting a successful business model 
C)  targeting a niche market 
D)  All of the above are techniques used by emerging MNEs. 
A)  engineering to innovation 
B)  exporting a successful business model 
C)  targeting a niche market 
D)  All of the above are techniques used by emerging MNEs.

Question 2

A ________ is a shared ownership in a foreign business.

Accepted Answer

A)  licensing agreement 
B)  greenfield investment 
C)  joint venture 
D)  wholly-owned affiliate 
A)  licensing agreement 
B)  greenfield investment 
C)  joint venture 
D)  wholly-owned affiliate

Question 3

The theory of ________ is an attempt to synthesize and extend those theories of FDI that are based on market imperfections.

Accepted Answer

A)  internationalization 
B)  externalization 
C)  internalization 
D)  diversification 
A)  internationalization 
B)  externalization 
C)  internalization 
D)  diversification

Question 4

Which of the following are characteristics of MNEs that have successfully invested abroad?

Accepted Answer

A)  economies of scale and scope 
B)  superior technology with heavy emphasis on research 
C)  demonstrated competitive advantage in their home markets 
D)  all of the above 
A)  economies of scale and scope 
B)  superior technology with heavy emphasis on research 
C)  demonstrated competitive advantage in their home markets 
D)  all of the above

Question 5

The O in OLI refers to an advantage in a firm's home market that is ________.

Accepted Answer

A)  operator independent 
B)  owner-specific 
C)  open-market 
D)  official designation 
A)  operator independent 
B)  owner-specific 
C)  open-market 
D)  official designation

Question 6

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Accepted Answer

A)  fewer political risks 
B)  greater agency costs 
C)  lower front-end investment 
D)  All of the above are advantages. 
A)  fewer political risks 
B)  greater agency costs 
C)  lower front-end investment 
D)  All of the above are advantages.

Question 7

Strategic alliances that have firms exchanging stock and forming joint ventures are more important in

Accepted Answer

A)  agricultural firms where government interference is critical for firm survival. 
B)  old fashioned basic industry where pure economies of scale are still dominant. 
C)  high tech industries where research and development costs are high and innovation is critical to success 
D)  none of the above. 
A)  agricultural firms where government interference is critical for firm survival. 
B)  old fashioned basic industry where pure economies of scale are still dominant. 
C)  high tech industries where research and development costs are high and innovation is critical to success 
D)  none of the above.

Question 8

Which of the following is NOT a proactive financial strategy related to the OLI paradigm in explaining FDI?

Accepted Answer

A)  strategies to gain lower global cost of capital 
B)  strategies to reduce global taxation 
C)  strategies to reduce operating and transaction exposure 
D)  All of the above are proactive strategies. 
A)  strategies to gain lower global cost of capital 
B)  strategies to reduce global taxation 
C)  strategies to reduce operating and transaction exposure 
D)  All of the above are proactive strategies.

Question 9

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Accepted Answer

A)  MNEs initially invest in countries with a similar "national psychic." 
B)  Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C)  Initial investments tend to be much larger than subsequent ones. 
D)  All of the above have been observed. 
A)  MNEs initially invest in countries with a similar "national psychic." 
B)  Firms eventually take greater risks in terms of the national psychic of countries in which they invest. 
C)  Initial investments tend to be much larger than subsequent ones. 
D)  All of the above have been observed.

Question 10

Which of the following is the motivation for making foreign direct investment?

Accepted Answer

A)  knowledge seeking 
B)  market seeking 
C)  raw material seeking 
D)  all of the above 
A)  knowledge seeking 
B)  market seeking 
C)  raw material seeking 
D)  all of the above

Question 11

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

Accepted Answer

A)  possible loss of opportunity to enter the licensee's market with FDI later 
B)  risk that technology will be stolen 
C)  high agency costs 
D)  All of the above are potential disadvantages to licensing. 
A)  possible loss of opportunity to enter the licensee's market with FDI later 
B)  risk that technology will be stolen 
C)  high agency costs 
D)  All of the above are potential disadvantages to licensing.

Question 12

The ________ is an attempt to create and overall framework to explain why MNEs rely on FDI rather than servicing foreign markets through alternative modes.

Accepted Answer

A)  OLI paradigm 
B)  internationalization paradigm 
C)  theory of competitive advantage 
D)  none of the above 
A)  OLI paradigm 
B)  internationalization paradigm 
C)  theory of competitive advantage 
D)  none of the above

Question 13

Which of the following is NOT a potential disadvantage to cross-border acquisitions?

Accepted Answer

A)  the meshing of different corporate cultures 
B)  host government intervention in the post-acquisition process 
C)  mis-pricing foreign assets and paying too much for the acquisition 
D)  All of the above are potential disadvantages. 
A)  the meshing of different corporate cultures 
B)  host government intervention in the post-acquisition process 
C)  mis-pricing foreign assets and paying too much for the acquisition 
D)  All of the above are potential disadvantages.

Question 14

The I in OLI refers to an advantage in a firm's home market that is an ________.

Accepted Answer

A)  internalization 
B)  industry-specific advantage 
C)  international abnormality 
D)  none of the above 
A)  internalization 
B)  industry-specific advantage 
C)  international abnormality 
D)  none of the above

Question 15

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

Accepted Answer

The OLI Paradigm is an attempt to develo

Question 16

A/n ________ would be an example of an internalization advantage for an MNE.

Accepted Answer

A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information 
A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information

Question 17

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

Accepted Answer

A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information 
A)  patent 
B)  economy of scale 
C)  unique source of raw materials 
D)  possession of proprietary information

Question 18

Embraer of Brazil was able to grow internationally by developing a new type of fuselage that allows airlines to acquire an airplane that provides superior comfort to passengers, ease of flying for the pilots, and lower operating costs for the firm. This is an example of ________.

Accepted Answer

A)  leveraging natural resources 
B)  engineering to innovation 
C)  exporting a business model 
D)  acquiring offshore assets 
A)  leveraging natural resources 
B)  engineering to innovation 
C)  exporting a business model 
D)  acquiring offshore assets

Question 19

The L in OLI refers to an advantage in a firm's home market that is a

Accepted Answer

A)  liability in the domestic market. 
B)  location-specific advantage. 
C)  longevity in a particular market. 
D)  none of the above. 
A)  liability in the domestic market. 
B)  location-specific advantage. 
C)  longevity in a particular market. 
D)  none of the above.

Question 20

The world's third largest aircraft maker after Boeing and Airbus is ________.

Accepted Answer

A)  Bombardier 
B)  LeerJet 
C)  Embraer 
D)  Cessna 
A)  Bombardier 
B)  LeerJet 
C)  Embraer 
D)  Cessna

Exam 17: Foreign Direct Investment Theory and Strategy

Which of the following is NOT a strategy employed by the firms included in the text list of emerging market MNEs?

A ________ is a shared ownership in a foreign business.

The theory of ________ is an attempt to synthesize and extend those theories of FDI that are based on market imperfections.

Which of the following are characteristics of MNEs that have successfully invested abroad?

The O in OLI refers to an advantage in a firm's home market that is ________.

Which of the following is NOT an advantage to exporting goods to reach international markets rather than entering into some form of FDI?

Strategic alliances that have firms exchanging stock and forming joint ventures are more important in

Which of the following is NOT a proactive financial strategy related to the OLI paradigm in explaining FDI?

Which of the following is NOT true regarding behavioral observations of firms making a decision to invest internationally?

Which of the following is the motivation for making foreign direct investment?

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

The ________ is an attempt to create and overall framework to explain why MNEs rely on FDI rather than servicing foreign markets through alternative modes.

Which of the following is NOT a potential disadvantage to cross-border acquisitions?

The I in OLI refers to an advantage in a firm's home market that is an ________.

What does the OLI Paradigm propose to explain? Define each component and provide an example of each.

A/n ________ would be an example of an internalization advantage for an MNE.

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

Embraer of Brazil was able to grow internationally by developing a new type of fuselage that allows airlines to acquire an airplane that provides superior comfort to passengers, ease of flying for the pilots, and lower operating costs for the firm. This is an example of ________.

The L in OLI refers to an advantage in a firm's home market that is a

The world's third largest aircraft maker after Boeing and Airbus is ________.

Globalization and the Multinational Enterprise

Financial Goals and Corporate Governance

The International Monetary System

The Balance of Payments

The Foreign Exchange Market

International Parity Conditions

Foreign Exchange Rate Determination and Forecasting

Foreign Currency Derivatives

Transaction Exposure

Operating Exposure

Translation Exposure

Global Cost and Availability of Capital

Sourcing Equity Capital Globally

Financial Structure and International Debt

Interest Rate and Currency Swaps

International Portfolio Theory and Diversification

Political Risk Assessment and Management

Multinational Capital Budgeting

International Trade Finance

Multinational Tax Management

Working Capital Management

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