Podcast
Questions and Answers
Which of the following is a trend seen in the modern international economy?
Which of the following is a trend seen in the modern international economy?
- Companies primarily use acquisitions to enter foreign markets.
- Firms from both advanced and emerging economies employ FDI. (correct)
- Emerging markets are the sole recipient countries for FDI.
- Firms in the service sector use e-commerce exclusively to enter foreign markets.
Foreign direct investment is the least risky entry strategy.
Foreign direct investment is the least risky entry strategy.
False (B)
International portfolio investment refers to a firm's direct control of foreign operations and is an equity-based method of foreign market entry.
International portfolio investment refers to a firm's direct control of foreign operations and is an equity-based method of foreign market entry.
False (B)
The rate of inflation is a(n) _______ factor to be considered while selecting the location for FDI.
The rate of inflation is a(n) _______ factor to be considered while selecting the location for FDI.
Which of the following must be considered in selecting foreign direct investment locations?
Which of the following must be considered in selecting foreign direct investment locations?
Which of the following best explains why some service industry firms most likely enter foreign markets through FDI?
Which of the following best explains why some service industry firms most likely enter foreign markets through FDI?
Which of the following best exemplifies corporate social responsibility?
Which of the following best exemplifies corporate social responsibility?
Which of the following represents an infrastructural factor that firms must consider when selecting an FDI location?
Which of the following represents an infrastructural factor that firms must consider when selecting an FDI location?
Which of the following represents a human resource factor that firms must consider when selecting an FDI location?
Which of the following represents a human resource factor that firms must consider when selecting an FDI location?
The level of taxes in a country is a part of the ______ factor that is considered when selecting an FDI location.
The level of taxes in a country is a part of the ______ factor that is considered when selecting an FDI location.
International portfolio investment refers to passive ownership of foreign securities.
International portfolio investment refers to passive ownership of foreign securities.
A firm most likely enters the home market of a foreign competitor in order to _______.
A firm most likely enters the home market of a foreign competitor in order to _______.
Which of the following is an example of a market-seeking motive for FDI?
Which of the following is an example of a market-seeking motive for FDI?
Which of the following is the most likely motive behind firms in the mining industry wanting to enter new foreign markets?
Which of the following is the most likely motive behind firms in the mining industry wanting to enter new foreign markets?
A firm that pursues foreign direct investment to take advantage of government incentives is demonstrating a(n) ______ motive.
A firm that pursues foreign direct investment to take advantage of government incentives is demonstrating a(n) ______ motive.
A firm that pursues a collaborative venture to access raw materials is demonstrating a(n) ______ motive.
A firm that pursues a collaborative venture to access raw materials is demonstrating a(n) ______ motive.
Which of the following industries considers proximity to customers especially important in the decision to enter a foreign market?
Which of the following industries considers proximity to customers especially important in the decision to enter a foreign market?
New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.
New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.
Avoiding trade barriers is classified as a market-seeking motive for FDI.
Avoiding trade barriers is classified as a market-seeking motive for FDI.
The existence of a substantial market motivates many firms to produce offerings at or near customer locations.
The existence of a substantial market motivates many firms to produce offerings at or near customer locations.
Firms often follow their key customers abroad to preempt other vendors from serving them.
Firms often follow their key customers abroad to preempt other vendors from serving them.
The strategic purpose behind firms competing with rivals in their own market is to force them to expend resources and thus, defend the firm's own market.
The strategic purpose behind firms competing with rivals in their own market is to force them to expend resources and thus, defend the firm's own market.
Companies opt for FDI to obtain advantages associated with locating at the hub of knowledge development and innovation in a given industry.
Companies opt for FDI to obtain advantages associated with locating at the hub of knowledge development and innovation in a given industry.
Economies of scale are decreases in per-unit cost of production resulting from decreasing output.
Economies of scale are decreases in per-unit cost of production resulting from decreasing output.
International expansion invariably results in a decrease in a firm's economies of scale.
International expansion invariably results in a decrease in a firm's economies of scale.
Compared to small firms, large companies usually can access capital at lower cost.
Compared to small firms, large companies usually can access capital at lower cost.
In the context of attaining economies of scope, using individual managers in each European country is more efficient that using the same base of managers all over Europe.
In the context of attaining economies of scope, using individual managers in each European country is more efficient that using the same base of managers all over Europe.
In the fashion industry, customer needs change rapidly and managers often locate factories or assembly operations near important customers.
In the fashion industry, customer needs change rapidly and managers often locate factories or assembly operations near important customers.
Governments encourage inward FDI because it transfers skill and technologies.
Governments encourage inward FDI because it transfers skill and technologies.
Explain why FDI is a particularly risky foreign entry strategy. How is FDI different from international portfolio investment?
Explain why FDI is a particularly risky foreign entry strategy. How is FDI different from international portfolio investment?
International portfolio investment is characterized by ______.
International portfolio investment is characterized by ______.
Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ______.
Firms that anticipate close public scrutiny of their foreign operations often avoid potential difficulties by ______.
Tariff and other trade barriers for exports and FDI are identical.
Tariff and other trade barriers for exports and FDI are identical.
By establishing a physical presence inside a country or an economic bloc, the foreign company obtains the same advantages as local firms.
By establishing a physical presence inside a country or an economic bloc, the foreign company obtains the same advantages as local firms.
Firms that engage in FDI avoid problematic trade barriers because the physical presence of a foreign firm earns it the same privileges as a local firm.
Firms that engage in FDI avoid problematic trade barriers because the physical presence of a foreign firm earns it the same privileges as a local firm.
A merger is a special type of acquisition.
A merger is a special type of acquisition.
Vertical integration is an arrangement in which the firm owns, or seeks to own, the activities performed in a single stage of its value chain.
Vertical integration is an arrangement in which the firm owns, or seeks to own, the activities performed in a single stage of its value chain.
Explain why MNEs prefer acquisition instead of greenfield FDI. Why do foreign governments encourage greenfield FDI?
Explain why MNEs prefer acquisition instead of greenfield FDI. Why do foreign governments encourage greenfield FDI?
Explain the difference between vertical FDI and horizontal FDI. Provide an example that illustrates the difference between vertical and horizontal integration.
Explain the difference between vertical FDI and horizontal FDI. Provide an example that illustrates the difference between vertical and horizontal integration.
Which of the following is a characteristic of project-based, non-equity ventures?
Which of the following is a characteristic of project-based, non-equity ventures?
Which of the following is a disadvantage of equity joint ventures?
Which of the following is a disadvantage of equity joint ventures?
A consortium is defined as ______.
A consortium is defined as ______.
Which of the following is a characteristic of an equity joint venture?
Which of the following is a characteristic of an equity joint venture?
A(n) ______ is a project-based, usually nonequity venture initiated by multiple partners to fulfill a large-scale project.
A(n) ______ is a project-based, usually nonequity venture initiated by multiple partners to fulfill a large-scale project.
Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm?
Which of the following is a key reason that a focal firm would most likely enter a collaborative venture with a foreign firm?
Discuss three reasons for firms seeking new market opportunities. Illustrate each with an example of a firm that sought a new foreign market for that particular motive.
Discuss three reasons for firms seeking new market opportunities. Illustrate each with an example of a firm that sought a new foreign market for that particular motive.
Discuss resource and asset-seeking motives for FDI. Why might a company favor acquisition over greenfield investment as an FDI approach?
Discuss resource and asset-seeking motives for FDI. Why might a company favor acquisition over greenfield investment as an FDI approach?
A firm that builds a new manufacturing facility in a foreign market is participating in a(n) ______.
A firm that builds a new manufacturing facility in a foreign market is participating in a(n) ______.
The purchase of an existing company or facility is known as a(n) ______.
The purchase of an existing company or facility is known as a(n) ______.
A(n) ______ is the purchase of an existing company or facility.
A(n) ______ is the purchase of an existing company or facility.
An arrangement whereby the firm owns, or seeks to own, multiple stages of a value chain for producing, selling, and delivering a product or service is termed as ______.
An arrangement whereby the firm owns, or seeks to own, multiple stages of a value chain for producing, selling, and delivering a product or service is termed as ______.
How does the acquisition of a foreign company most likely benefit a focal firm in the foreign market?
How does the acquisition of a foreign company most likely benefit a focal firm in the foreign market?
A(n) ______ is a special type of acquisition in which two companies join to form a larger firm.
A(n) ______ is a special type of acquisition in which two companies join to form a larger firm.
Which of the following terms is used to refer to a focal firm's partial ownership of an existing firm?
Which of the following terms is used to refer to a focal firm's partial ownership of an existing firm?
Collaborative ventures benefit SMEs by providing them with ______.
Collaborative ventures benefit SMEs by providing them with ______.
A firm that develops the capacity to sell its products by investing in marketing and selling operations is ______.
A firm that develops the capacity to sell its products by investing in marketing and selling operations is ______.
A firm that owns the activities performed in a single stage of its value chain is demonstrating ______.
A firm that owns the activities performed in a single stage of its value chain is demonstrating ______.
Discuss the four key differences between project-based, nonequity ventures and equity ventures.
Discuss the four key differences between project-based, nonequity ventures and equity ventures.
Cross-licensing agreements are a type of project-based, nonequity venture in which the partners agree to allow access to licensed intellectual property developed by the other on preferential terms.
Cross-licensing agreements are a type of project-based, nonequity venture in which the partners agree to allow access to licensed intellectual property developed by the other on preferential terms.
Equity joint ventures have the simplest management structure.
Equity joint ventures have the simplest management structure.
FDI is the most advanced and complex foreign market entry strategy.
FDI is the most advanced and complex foreign market entry strategy.
A form of collaboration between two firms to form a new, jointly owned enterprise is defined as a joint venture.
A form of collaboration between two firms to form a new, jointly owned enterprise is defined as a joint venture.
FDI is also known as international portfolio investment.
FDI is also known as international portfolio investment.
Flashcards
FDI Trend
FDI Trend
Firms from both developed and developing countries engage in foreign direct investment (FDI).
FDI Risk
FDI Risk
Foreign direct investment is not the least risky entry strategy.
International Portfolio Investment
International Portfolio Investment
Passive ownership of foreign securities, not direct control of foreign operations.
FDI Location Factor - Inflation
FDI Location Factor - Inflation
Signup and view all the flashcards
FDI Location Factors
FDI Location Factors
Signup and view all the flashcards
Service FDI Motive
Service FDI Motive
Signup and view all the flashcards
Corporate Social Responsibility (CSR)
Corporate Social Responsibility (CSR)
Signup and view all the flashcards
FDI Location Factor - Infrastructure
FDI Location Factor - Infrastructure
Signup and view all the flashcards
FDI Location Factor - Human Resources
FDI Location Factor - Human Resources
Signup and view all the flashcards
FDI Location Factor - Taxes
FDI Location Factor - Taxes
Signup and view all the flashcards
Home Market Competition
Home Market Competition
Signup and view all the flashcards
Market-Seeking FDI Motive
Market-Seeking FDI Motive
Signup and view all the flashcards
Mining Industry Motive
Mining Industry Motive
Signup and view all the flashcards
Efficiency-Seeking FDI Motive
Efficiency-Seeking FDI Motive
Signup and view all the flashcards
Collaborative Venture Motive
Collaborative Venture Motive
Signup and view all the flashcards
Customer Proximity Industry
Customer Proximity Industry
Signup and view all the flashcards
FDI Motives
FDI Motives
Signup and view all the flashcards
Avoiding Trade Barriers
Avoiding Trade Barriers
Signup and view all the flashcards
Market Motive for FDI
Market Motive for FDI
Signup and view all the flashcards
Study Notes
Foreign Direct Investment and Collaborative Ventures
- Foreign direct investment (FDI) is a trend in the modern international economy, with firms from both developed and emerging economies engaging in it. Emerging markets are not the sole recipients of FDI.
- Companies primarily use acquisitions to enter foreign markets.
- FDI is not the least risky entry strategy.
- International portfolio investment is not a firm's direct control of foreign operations and is not an equity-based method of foreign market entry.
- The rate of inflation is a profit retention factor to be considered when selecting FDI locations.
- Other factors to consider include tax rates for profit repatriation, and the stability of currency.
- Service industry firms often use FDI due to the need for direct customer contact.
- Corporate social responsibility is exemplified by an automotive firm offering free technical training to underprivileged students.
- Infrastructural factors to consider when selecting an FDI location include size and growth of a national market, political stability, availability, and quality of local manufacturing, and stability of currency.
- A key human resource factor for firms considering FDI locations is the extent of bureaucracy and red tape, as well as involvement of labor unions.
- International portfolio investment involves passive ownership of foreign securities.
- Firms might enter a competitor's home market to force the competitor into expending resources.
- The primary motive for firms in the mining industry when entering foreign markets is access to natural resources.
- FDI is often undertaken to take advantage of government incentives.
- Firms frequently use collaborative ventures to gain access to raw materials.
Motives for Firms to Enter Foreign Markets
- New markets, new resources, and improved efficiency are the three main motives for firms to enter foreign markets through FDI.
- Avoiding trade barriers is classified as a market-seeking motive for FDI.
- Customer proximity is important for businesses in the fashion industry when considering entering new foreign markets.
- Governments encourage inward FDI because it transfers skills and technologies.
- The existence of a large market motivates firms to produce goods or services in the vicinity of customers.
- Firms might follow their key customers overseas to deter other vendors.
Types of FDI
- Firms might select FDI projects based on the possibility of acquiring production factors that are less costly or more abundant in a foreign country.
- Firms might choose to acquire existing facilities in a foreign country.
- Firms also might utilize greenfield investments to build new facilities.
- Acquisitions are a form of integrating into an existing business.
- Vertical integration refers to an arrangement where a firm seeks control over various phases of production or distribution.
- Horizontal integration refers to a firms' control over activities at one stage of production, sales, and/or distribution.
- Vertical FDI and Horizontal FDI- these are two different ways a firm can use FDI for its own advantages.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Related Documents
Description
Explore the fundamental aspects of Foreign Direct Investment (FDI) and collaborative ventures. This quiz covers key considerations such as entry strategies, risk factors, and the impact of inflation and tax rates on FDI decisions. Test your knowledge on how firms engage in international markets and the role of corporate social responsibility.
