Exam 16: Foreign Direct Investment and Cross-Border Acquisitions

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.

In 1992,the Enron Development Corporation,a subsidiary of the Houston-based energy company,signed a contract to build the largest-ever power plant in India,requiring a total investment of $2.8 billion.After Enron had spent nearly $300 million,the project was canceled by Hindu nationalist politicians in the Maharashtra state where the plant was to be built.Which of the following is true?

Intangible assets are often hard to package and sell to foreigners

The conflicts between the upstream and downstream firms can be resolved,

Mergers and acquisitions are a popular mode of investment for firms wishing to protect,consolidate and advance their global competitive positions.Examples include,

The dominant source of FDI outflows

In 1992,the Enron Development Corporation,a subsidiary of the Houston-based energy company,signed a contract to build the largest-ever power plant in India,requiring a total investment of $2.8 billion.After Enron had spent nearly $300 million,the project was canceled by Hindu nationalist politicians in the Maharashtra state where the plant was to be built.Which of the following is true?

Once a MNC decides to undertake a foreign project,it can take various measures to minimize its exposure to political risk.These include

Such products as mineral ore and cement that are heavy or bulky relative to their economic values

Which of the following statements is true about product life cycle theory?

International markets for goods and services are often imperfect.Which is the MOST common and MOST important?

Severe imperfections in the labor market lead to

The rapid increase in cross-border M&A deals can be attributed to

Country risk refers to

Whether or not cross-border acquisitions produce synergistic gains and how such gains are divided between acquiring and target firms

An increase in political risk can be managed by

Countries may welcome Greenfield investments,

MNCs may undertake overseas investment projects in a foreign country,despite the fact that local firms may enjoy inherent advantages.This implies that

More than fifty percent of FDI in dollar terms

FDI can take the form of