Exam 16: Foreign Direct Investment and Cross-Border Acquisitions

Imperfections in the market for intangible assets can also play a major role in motivating firms to undertake cross-border acquisitions.According to the internalization theory,

The Ford Motor Company recently acquired Mazda,a Japanese auto maker,and Jaguar,a British auto maker.

FDI vertical integration is backward

Coca-Cola has invested in bottling plants all over the world rather than licensing local firms

An increase in political risk can be managed by

Considering the fact that many barriers to international portfolio investments have been dismantled in recent years,

In the early 1980s,Honda,the Japanese automobile company,built an assembly plant in Marysville,Ohio,and began to produce cars for the North American market.As the production capacity at the Ohio plant expanded,Honda began to export its U.S.-manufactured cars to Japan.

Also,MNCs often find it profitable to locate manufacturing/processing facilities near

A classic example for trade barrier-motivated FDI is

Alternatives to firms locating production overseas include

Synergistic gains refers to

Japan plays a major role as an exporter of FDI.As a recipient of FDI,

Shareholders of U.S.targets experience higher wealth gains when they are acquired by foreign firms than when acquired by U.S.firms.

Political risk refers to

The key factors that are important in a firm's decision to invest overseas are

Labor services in a country can be severely underpriced relative to its productivity

Countries may welcome greenfield investments,

Cross-border acquisitions are generally found to be synergy-generating corporate activities.

According to a recent UN survey,the world FDI stock grew to what amount in 2015?

Cross-border acquisitions of businesses are a politically sensitive issue,