Exam 7: Foreign Direct Investment

Which of the following statements is true regarding complete ownership of a business in another country?

________ is the advantage of conducting a particular economic activity in a specific area because of the characteristics of that place.

Building a subsidiary abroad from the ground up is called a greenfield investment.

Which of the following is a reason for host country intervention in foreign direct investment (FDI)flows?

The ________ theory states that a company will begin by exporting its product and later undertake foreign direct investment as a product moves from development to maturity.

To capitalize on buyer perceptions of high quality,a watchmaker might produce in which of the following countries?

A market that is said to operate at peak efficiency and where goods are readily and easily available is said to be a(n)________.

In the ________ stage of the international product life cycle,a company directly invests in production facilities in countries where demand is great enough to warrant its own production facilities.

Scenario: Blickinstock at the Crossroads Auto parts supplier,Blickinstock Ltd. ,would like to expand its presence in Latin America.To that end,Blickinstock is trying to decide whether to purchase an existing company in a remote region of Argentina or build its own subsidiary.Keith Moon,Blickinstock's vice president of global business development,will be making a presentation to the board outlining the company's options. -If Blickinstock's home government tries to stop the company from investing in Latin America,the government may be trying to ________.

According to the eclectic theory,an internalization advantage is the advantage that arises from internalizing a business activity rather than leaving it to a relatively inefficient market.

A nation's balance of payments consists of two components: the ________ account and the ________ account.

Explain the theory of market imperfections and describe the two market imperfections.

The ________ is a national account that records transactions involving the import and export of goods and services,income receipts on assets abroad,and income payments on foreign assets inside the country.

Trade barriers and specialized knowledge are both examples of market imperfections.

________ prohibit nondomestic companies from investing in certain industries or owning certain types of businesses.