Question 1 Multiple Choice 0 of 1 point(s)
______ received the smallest amount of inward FDI in 2001.
Your Answer: The United States
Correct Answer: Africa
Feedback: Difficulty: MediumPage: 218
Question 2 Multiple Choice 1 of 1 point(s)
McDonalds has expanded into foreign markets primarily through
Your Answer: franchising.
Correct Answer: franchising.
Feedback: Difficulty: MediumPage: 232
Question 3 Multiple Choice 1 of 1 point(s)
__________ foreign direct investment is FDI in the same industry as a firm operates in at home.
Your Answer: Horizontal
Correct Answer: Horizontal
Feedback: Difficulty: MediumPage: 215
Question 4 Multiple Choice 0 of 1 point(s)
The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year).
Your Answer: portfolio
Correct Answer: flow
Feedback: Difficulty: EasyPage: 215
Question 5 True/False 0 of 1 point(s)
The flow of FDI has not only accelerated over the last quarter century, but is also accelerated faster than the growth in world trade.
Your Answer: false
Correct Answer: true
Feedback: Difficulty: MediumPage: 215
Question 6 True/False 1 of 1 point(s)
In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 221
Question 7 Multiple Choice 0 of 1 point(s)
The advantage claimed for licensing over FDI is that the licensor:
Your Answer: does not have to pay taxes on royalty income
Correct Answer: does not have to pay for opening a foreign market
Feedback: Difficulty: MediumPage: 215
Question 8 True/False 1 of 1 point(s)
Governments are the main source of impediments to the free flow of products between nations.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 224
Question 9 Multiple Choice 1 of 1 point(s)
The location-specific advantages argument association with John Dunning helps explain the _____ of FDI, both with regard to horizontal and vertical FDI.
Your Answer: direction
Correct Answer: direction
Feedback: Difficulty: MediumPage: 231
Question 10 True/False 1 of 1 point(s)
Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 227
Question 1 Multiple Choice 0 of 1 point(s)
According to our textbook, _____ are the main source of impediments to the free flow of products between nations.
Your Answer: individuals
Correct Answer: governments
Feedback: Difficulty: MediumPage: 224
Question 2 Multiple Choice 1 of 1 point(s)
One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries.
Your Answer: F.T. Knickerbocker
Correct Answer: F.T. Knickerbocker
Feedback: Difficulty: MediumPage: 226
Question 3 Multiple Choice 0 of 1 point(s)
Firms undertake FDI at _______ is Raymond Vernon's view of foreign direct investment.
Your Answer: early stages in their corporate histories
Correct Answer: particular stages in the life cycle of a product they have pioneered
Feedback: Difficulty: MediumPage: 227
Question 4 Multiple Choice 0 of 1 point(s)
If Siemens, a German firm, purchased a 20% interest in a manufacturing firm in the United States, Siemens would be engaging in
Your Answer: cross-boarder international investment.
Correct Answer: foreign direct investment.
Feedback: Difficulty: MediumPage: 214
Question 5 True/False 0 of 1 point(s)
Since World War II, Great Britain has traditionally been by far the largest source country for FDI.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 220
Question 6 Multiple Choice 0 of 1 point(s)
______ foreign direct investment is FDI in an industry that provides inputs for a firm's domestic operations, or it may be FDI in an industry abroad that sells the outputs of a firm's domestic operations.
Your Answer: Horizontal
Correct Answer: Vertical
Feedback: Difficulty: MediumPage: 215
Question 7 True/False 0 of 1 point(s)
A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive.
Your Answer: false
Correct Answer: true
Feedback: Difficulty: MediumPage: 224
Question 8 Multiple Choice 1 of 1 point(s)
The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001.
Your Answer: 70
Correct Answer: 70
Feedback: Difficulty: HardPage: 221
Question 9 True/False 0 of 1 point(s)
Foreign direct investment occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country.
Your Answer: false
Correct Answer: true
Feedback: Difficulty: EasyPage: 214
Question 10 True/False 0 of 1 point(s)
There has been a rapid decrease in the total volume of FDI over the past 20 years.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 215
Question 1 Multiple Choice 0 of 1 point(s)
When Starbucks invested $10 million in Starbucks Coffee of Japan in 1996, it was engaging in:
Your Answer: international capital investment
Correct Answer: foreign direct investment
Feedback: Difficulty: MediumPage: 213
Question 2 Multiple Choice 0 of 1 point(s)
The ______ of FDI refers to the total accumulated value of foreign-owned assets at a given time.
Your Answer: selection
Correct Answer: stock
Feedback: Difficulty: EasyPage: 215
Question 3 Multiple Choice 0 of 1 point(s)
The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year).
Your Answer: stock
Correct Answer: flow
Feedback: Difficulty: EasyPage: 215
Question 4 Multiple Choice 0 of 1 point(s)
__________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes.
Your Answer: Forward horizontal
Correct Answer: Forward vertical
Feedback: Difficulty: MediumPage: 229
Question 5 Multiple Choice 0 of 1 point(s)
If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of
Your Answer: multinational investment.
Correct Answer: foreign direct investment.
Feedback: Difficulty: MediumPage: 214
Question 6 True/False 0 of 1 point(s)
FDI is growing more rapidly than world trade but not more rapidly than world output.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: HardPage: 215
Question 7 Multiple Choice 0 of 1 point(s)
The investment by individuals, firms, or public bodies in foreign financial instruments is referred to as:
Your Answer: foreign direct investment
Correct Answer: foreign portfolio investment
Feedback: Difficulty: MediumPage: 214
Question 8 True/False 1 of 1 point(s)
The high level of FDI outflows from the U.S. has been driven by a combination of factors including a strong U.S. economy; strong corporate profits and cash flow; and a relatively strong currency.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 221
Question 9 True/False 0 of 1 point(s)
Foreign portfolio investment involves taking a significant equity stake in a foreign business entity.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 214
Question 10 Multiple Choice 0 of 1 point(s)
FDI is growing more rapidly than:
Your Answer: world output but not world trade
Correct Answer: world trade and world output
Feedback: Difficulty: MediumPage: 215
Question 1 True/False 0 of 1 point(s)
Since World War II, Great Britain has traditionally been by far the largest source country for FDI.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 220
Question 2 Multiple Choice 0 of 1 point(s)
The licensor _______ in return for licensing one of its products to a foreign firm.
Your Answer: gets a special subsidy from the country of the licensee
Correct Answer: collects a royalty fee on every unit the licensee sells
Feedback: Difficulty: MediumPage: 215
Question 3 Multiple Choice 1 of 1 point(s)
McDonalds has expanded into foreign markets primarily through
Your Answer: franchising.
Correct Answer: franchising.
Feedback: Difficulty: MediumPage: 232
Question 4 True/False 1 of 1 point(s)
Externalities are knowledge spillovers that occur when companies in the same industry locate in the same area.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 228
Question 5 Multiple Choice 0 of 1 point(s)
When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____ occurs.
Your Answer: reciprocal foreign investment
Correct Answer: foreign direct investment
Feedback: Difficulty: EasyPage: 214
Question 6 Multiple Choice 0 of 1 point(s)
Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____.
Your Answer: FDI, exporting and licensing
Correct Answer: exporting, FDI and licensing
Feedback: Difficulty: MediumPage: 224
Question 7 Multiple Choice 0 of 1 point(s)
According to our textbook, _____ are the main source of impediments to the free flow of products between nations.
Your Answer: special interest groups
Correct Answer: governments
Feedback: Difficulty: MediumPage: 224
Question 8 True/False 1 of 1 point(s)
In general, foreign direct investment is less expensive and less risky than either licensing or exporting.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 223
Question 9 True/False 0 of 1 point(s)
Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
Your Answer: false
Correct Answer: true
Feedback: Difficulty: MediumPage: 227
Question 10 True/False 1 of 1 point(s)
The establishment of a wholly new operation in a foreign country is referred to as a green-field investment.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 214
Question 1 Multiple Choice 0 of 1 point(s)
Firms undertake FDI at _______ is Raymond Vernon's view of foreign direct investment.
Your Answer: late stages in their corporate histories
Correct Answer: particular stages in the life cycle of a product they have pioneered
Feedback: Difficulty: MediumPage: 227
Question 2 True/False 1 of 1 point(s)
A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 224
Question 3 Multiple Choice 0 of 1 point(s)
Camelot Baby Carriages decided to enter the European market. Sam's Strollers followed to ensure that Camelot would not gain competitive advantage in Europe that could lead to the same thing occurring in Asia. Sam's then decides to enter the Australian market, and Camelot follows. This is an example of:
Your Answer: monopoint competition.
Correct Answer: multipoint competition.
Feedback: Difficulty: MediumPage: 227
Question 4 Multiple Choice 1 of 1 point(s)
A(n) _______ is a company that conducts business in more than one country.
Your Answer: multinational enterprise
Correct Answer: multinational enterprise
Feedback: Difficulty: EasyPage: 214
Question 5 True/False 0 of 1 point(s)
FDI is growing more rapidly than world trade but not more rapidly than world output.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: HardPage: 215
Question 6 Multiple Choice 1 of 1 point(s)
When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____ occurs.
Your Answer: foreign direct investment
Correct Answer: foreign direct investment
Feedback: Difficulty: EasyPage: 214
Question 7 Multiple Choice 0 of 1 point(s)
Vertical FDI takes two forms. These are:
Your Answer: upward vertical FDI and downward vertical FDI
Correct Answer: backward vertical FDI and forward vertical FDI
Feedback: Difficulty: MediumPage: 229
Question 8 Multiple Choice 1 of 1 point(s)
Once a firm undertakes FDI, it becomes a(n)
Your Answer: multinational enterprise.
Correct Answer: multinational enterprise.
Feedback: Difficulty: EasyPage: 214
Question 9 True/False 0 of 1 point(s)
The eclectic paradigm has come under sharp criticism by British economist John Dunning.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: HardPage: 228
Question 10 True/False 1 of 1 point(s)
Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 227
Question 1 Multiple Choice 0 of 1 point(s)
One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries.
Your Answer: Michael Porter
Correct Answer: F.T. Knickerbocker
Feedback: Difficulty: MediumPage: 226
Question 2 Multiple Choice 1 of 1 point(s)
When two or more enterprises encounter each other in different regional markets, national markets, or industries, _______ arises.
Your Answer: multipoint competition
Correct Answer: multipoint competition
Feedback: Difficulty: MediumPage: 227
Question 3 Multiple Choice 1 of 1 point(s)
If 3M, an American firm, produces adhesive tape in St. Paul, Minnesota, and ships the tape to South Korea to be sold, that is an example of:
Your Answer: exporting.
Correct Answer: exporting.
Feedback: Difficulty: EasyPage: 223
Question 4 Multiple Choice 1 of 1 point(s)
McDonalds has expanded into foreign markets primarily through
Your Answer: franchising.
Correct Answer: franchising.
Feedback: Difficulty: MediumPage: 232
Question 5 True/False 1 of 1 point(s)
The establishment of a wholly new operation in a foreign country is referred to as a green-field investment.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 214
Question 6 Multiple Choice 1 of 1 point(s)
The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001.
Your Answer: 70
Correct Answer: 70
Feedback: Difficulty: HardPage: 221
Question 7 Multiple Choice 1 of 1 point(s)
An industry composed of a limited number of large firms (i.e. an industry in which four firm's control 80 percent of a domestic market) is referred to as a(n):
Your Answer: oligopoly.
Correct Answer: oligopoly.
Feedback: Difficulty: EasyPage: 226
Question 8 Multiple Choice 0 of 1 point(s)
The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year).
Your Answer: portfolio
Correct Answer: flow
Feedback: Difficulty: EasyPage: 215
Question 9 Multiple Choice 0 of 1 point(s)
With regard to horizontal FDI, market imperfections arise in two circumstances. These are:
Your Answer: when tariff rates are high, and when import quotas are restrictive
Correct Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how
Feedback: Difficulty: HardPage: 224
Question 10 True/False 1 of 1 point(s)
FDI is growing more rapidly than world trade but not more rapidly than world output.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: HardPage: 215
Name: Quiz 4: Chapter 6
Status: Completed
Score: 4 out of 10 point(s)
Time Elapsed: 6 minutes and 53 seconds out of 10 minutes allowed.
Instructions:
Question 1 Multiple Choice 1 of 1 point(s)
An industry composed of a limited number of large firms (i.e. an industry in which four firm's control 80 percent of a domestic market) is referred to as a(n):
Your Answer: oligopoly.
Correct Answer: oligopoly.
Feedback: Difficulty: EasyPage: 226
Question 2 Multiple Choice 0 of 1 point(s)
The investment by individuals, firms, or public bodies in foreign financial instruments is referred to as:
Your Answer: foreign direct investment
Correct Answer: foreign portfolio investment
Feedback: Difficulty: MediumPage: 214
Question 3 True/False 0 of 1 point(s)
Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive.
Your Answer: false
Correct Answer: true
Feedback: Difficulty: MediumPage: 223
Question 4 True/False 0 of 1 point(s)
In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 221
Question 5 True/False 1 of 1 point(s)
There has been a rapid decrease in the total volume of FDI over the past 20 years.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 215
Question 6 Multiple Choice 0 of 1 point(s)
__________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes.
Your Answer: Forward horizontal
Correct Answer: Forward vertical
Feedback: Difficulty: MediumPage: 229
Question 7 True/False 0 of 1 point(s)
Once a firm undertakes FDI for more than two years, it becomes a multinational enterprise.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: EasyPage: 214
Question 8 Multiple Choice 1 of 1 point(s)
Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?
Your Answer: Licensing
Correct Answer: Licensing
Feedback: Difficulty: EasyPage: 215
Question 9 Multiple Choice 0 of 1 point(s)
The ______ approach points to the importance of investments in specialized assets and imperfections in the market for know-how as factors that increase the relative attractiveness of vertical FDI.
Your Answer: location-specific advantages
Correct Answer: market imperfections
Feedback: Difficulty: HardPage: 233
Question 10 True/False 1 of 1 point(s)
A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: HardPage: 225
Question 1 True/False 0 of 1 point(s)
In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 221
Question 2 Multiple Choice 1 of 1 point(s)
FDI takes on two main forms. They are:
Your Answer: green-field investments and acquiring or merging with an existing firm
Correct Answer: green-field investments and acquiring or merging with an existing firm
Feedback: Difficulty: MediumPage: 214
Question 3 True/False 1 of 1 point(s)
Most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the others' markets.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 217
Question 4 Multiple Choice 0 of 1 point(s)
Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____.
Your Answer: exporting and licensing, FDI
Correct Answer: exporting, FDI and licensing
Feedback: Difficulty: MediumPage: 224
Question 5 True/False 1 of 1 point(s)
Recently, FDI inflows into the world's developing nations have been on the decline.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 217
Question 6 Multiple Choice 1 of 1 point(s)
A(n) _______ is a company that conducts business in more than one country.
Your Answer: multinational enterprise
Correct Answer: multinational enterprise
Feedback: Difficulty: EasyPage: 214
Question 7 Multiple Choice 0 of 1 point(s)
According to the textbook, a firm will favor ______ over _____ when it wishes to maintain control over its technological know-how, or over its operations and business strategy.
Your Answer: foreign direct investment, exporting
Correct Answer: foreign direct investment, licensing
Feedback: Difficulty: HardPage: 225
Question 8 True/False 1 of 1 point(s)
The flow of FDI has not only accelerated over the last quarter century, but is also accelerated faster than the growth in world trade.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 215
Question 9 Multiple Choice 0 of 1 point(s)
Historically, most FDI has been directed at the ______ nations of the world as firms based in advanced countries invested in _______.
Your Answer: underdeveloped, each other's markets
Correct Answer: developed, each other's markets
Feedback: Difficulty: HardPage: 217
Question 10 True/False 1 of 1 point(s)
Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 227
Question 1 True/False 1 of 1 point(s)
Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 227
Question 2 Multiple Choice 1 of 1 point(s)
Dunning argues that combining location specific assets or resource endowments and the firm's own unique capabilities often requires:
Your Answer: FDI.
Correct Answer: FDI.
Feedback: Difficulty: MediumPage: 228
Question 3 Multiple Choice 0 of 1 point(s)
According to economic theory, there are three reasons the market does not always work well as a mechanism for selling know-how. Which of the following is not one of these reasons?
Your Answer: A firm's know-how may not be amenable to licensing
Correct Answer: Uncertainties in tariff rates make licensing unattractive, particularly if tariff rates go up
Feedback: Difficulty: HardPage: 224-225
Question 4 Multiple Choice 1 of 1 point(s)
One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries.
Your Answer: F.T. Knickerbocker
Correct Answer: F.T. Knickerbocker
Feedback: Difficulty: MediumPage: 226
Question 5 Multiple Choice 1 of 1 point(s)
If Siemens, a German firm, purchased a 20% interest in a manufacturing firm in the United States, Siemens would be engaging in
Your Answer: foreign direct investment.
Correct Answer: foreign direct investment.
Feedback: Difficulty: MediumPage: 214
Question 6 Multiple Choice 1 of 1 point(s)
When two or more enterprises encounter each other in different regional markets, national markets, or industries, _______ arises.
Your Answer: multipoint competition
Correct Answer: multipoint competition
Feedback: Difficulty: MediumPage: 227
Question 7 Multiple Choice 1 of 1 point(s)
__________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes.
Your Answer: Forward vertical
Correct Answer: Forward vertical
Feedback: Difficulty: MediumPage: 229
Question 8 True/False 1 of 1 point(s)
A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 224
Question 9 True/False 1 of 1 point(s)
A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: HardPage: 225
Question 10 Multiple Choice 1 of 1 point(s)
An industry composed of a limited number of large firms (i.e. an industry in which four firm's control 80 percent of a domestic market) is referred to as a(n):
Your Answer: oligopoly.
Correct Answer: oligopoly.
Feedback: Difficulty: EasyPage: 226
Question 1 Multiple Choice 1 of 1 point(s)
______ received the smallest amount of inward FDI in 2001.
Your Answer: Africa
Correct Answer: Africa
Feedback: Difficulty: MediumPage: 218
Question 2 True/False 1 of 1 point(s)
Thirty years ago, Starbucks was a single store. Today, it is a global roaster and retailer of coffee with over 3,500 stores, more than 310 of which are located in Japan.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 213
Question 3 Multiple Choice 1 of 1 point(s)
The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001.
Your Answer: 70
Correct Answer: 70
Feedback: Difficulty: HardPage: 221
Question 4 True/False 0 of 1 point(s)
The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: EasyPage: 215
Question 5 Multiple Choice 1 of 1 point(s)
The flow of foreign direct investment out of a country is
Your Answer: outflow of FDI.
Correct Answer: outflow of FDI.
Feedback: Difficulty: EasyPage: 215
Question 6 Multiple Choice 1 of 1 point(s)
One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries.
Your Answer: F.T. Knickerbocker
Correct Answer: F.T. Knickerbocker
Feedback: Difficulty: MediumPage: 226
Question 7 Multiple Choice 1 of 1 point(s)
FDI takes on two main forms. They are:
Your Answer: green-field investments and acquiring or merging with an existing firm
Correct Answer: green-field investments and acquiring or merging with an existing firm
Feedback: Difficulty: MediumPage: 214
Question 8 Multiple Choice 1 of 1 point(s)
Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____.
Your Answer: exporting, FDI and licensing
Correct Answer: exporting, FDI and licensing
Feedback: Difficulty: MediumPage: 224
Question 9 Multiple Choice 1 of 1 point(s)
The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year).
Your Answer: flow
Correct Answer: flow
Feedback: Difficulty: EasyPage: 215
Question 10 Multiple Choice 1 of 1 point(s)
With regard to horizontal FDI, market imperfections arise in two circumstances. These are:
Your Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how
Correct Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how
Feedback: Difficulty: HardPage: 224
Question 1 Multiple Choice 1 of 1 point(s)
FDI takes on two main forms. They are:
Your Answer: green-field investments and acquiring or merging with an existing firm
Correct Answer: green-field investments and acquiring or merging with an existing firm
Feedback: Difficulty: MediumPage: 214
Question 2 Multiple Choice 1 of 1 point(s)
The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year).
Your Answer: flow
Correct Answer: flow
Feedback: Difficulty: EasyPage: 215
Question 3 True/False 1 of 1 point(s)
In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 221
Question 4 Multiple Choice 1 of 1 point(s)
Once a firm undertakes FDI, it becomes a(n)
Your Answer: multinational enterprise.
Correct Answer: multinational enterprise.
Feedback: Difficulty: EasyPage: 214
Question 5 Multiple Choice 1 of 1 point(s)
The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001.
Your Answer: 70
Correct Answer: 70
Feedback: Difficulty: HardPage: 221
Question 6 True/False 1 of 1 point(s)
Vertical foreign direct investment is FDI in an industry that provides inputs for a firm's domestic operations, or it may be FDI in an industry abroad that sells the outputs of a firm's domestic operations.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 215
Question 7 True/False 1 of 1 point(s)
The high level of FDI outflows from the U.S. has been driven by a combination of factors including a strong U.S. economy; strong corporate profits and cash flow; and a relatively strong currency.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 221
Question 8 True/False 1 of 1 point(s)
Recently, FDI inflows into the world's developing nations have been on the decline.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 217
Question 9 Multiple Choice 0 of 1 point(s)
Which of the following factors is not one of the factors identified in the textbook that alters the relative attractiveness of exporting, licensing, and FDI?
Your Answer: Strategic behavior
Correct Answer: Tax implications
Feedback: Difficulty: MediumPage: 224-226
Question 10 Multiple Choice 1 of 1 point(s)
The flow of foreign direct investment into a country is referred to as the
Your Answer: inflow of FDI.
Correct Answer: inflow of FDI.
Feedback: Difficulty: EasyPage: 215
Question 1 True/False 1 of 1 point(s)
Most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the others' markets.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 217
Question 2 True/False 1 of 1 point(s)
There has been a rapid decrease in the total volume of FDI over the past 20 years.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 215
Question 3 Multiple Choice 1 of 1 point(s)
_____ are factors that inhibit markets from working perfectly.
Your Answer: Market imperfections
Correct Answer: Market imperfections
Feedback: Difficulty: MediumPage: 224
Question 4 Multiple Choice 1 of 1 point(s)
Once a firm undertakes FDI, it becomes a(n)
Your Answer: multinational enterprise.
Correct Answer: multinational enterprise.
Feedback: Difficulty: EasyPage: 214
Question 5 Multiple Choice 1 of 1 point(s)
With regard to horizontal FDI, market imperfections arise in two circumstances. These are:
Your Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how
Correct Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how
Feedback: Difficulty: HardPage: 224
Question 6 Multiple Choice 1 of 1 point(s)
If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of
Your Answer: foreign direct investment.
Correct Answer: foreign direct investment.
Feedback: Difficulty: MediumPage: 214
Question 7 Multiple Choice 1 of 1 point(s)
Vertical FDI takes two forms. These are:
Your Answer: backward vertical FDI and forward vertical FDI
Correct Answer: backward vertical FDI and forward vertical FDI
Feedback: Difficulty: MediumPage: 229
Question 8 True/False 1 of 1 point(s)
The stock of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 215
Question 9 Multiple Choice 0 of 1 point(s)
According to ______, firms undertake FDI to exploit resource endowments or assets that are location specific.
Your Answer: Porter
Correct Answer: Dunning
Feedback: Difficulty: MediumPage: 228
Question 10 True/False 1 of 1 point(s)
The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: EasyPage: 215
Question 1 Multiple Choice 1 of 1 point(s)
The flow of foreign direct investment out of a country is
Your Answer: outflow of FDI.
Correct Answer: outflow of FDI.
Feedback: Difficulty: EasyPage: 215
Question 2 Multiple Choice 0 of 1 point(s)
The ______ of FDI refers to the total accumulated value of foreign-owned assets at a given time.
Your Answer: flow
Correct Answer: stock
Feedback: Difficulty: EasyPage: 215
Question 3 Multiple Choice 1 of 1 point(s)
When Starbucks invested $10 million in Starbucks Coffee of Japan in 1996, it was engaging in:
Your Answer: foreign direct investment
Correct Answer: foreign direct investment
Feedback: Difficulty: MediumPage: 213
Question 4 True/False 1 of 1 point(s)
In general, foreign direct investment is less expensive and less risky than either licensing or exporting.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 223
Question 5 True/False 1 of 1 point(s)
Recently, FDI inflows into the world's developing nations have been on the decline.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 217
Question 6 True/False 1 of 1 point(s)
Gross fixed capital formation summarizes the total amount of capital invested in factories, stores, office buildings, and the like.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 219
Question 7 Multiple Choice 1 of 1 point(s)
Once a firm undertakes FDI, it becomes a(n)
Your Answer: multinational enterprise.
Correct Answer: multinational enterprise.
Feedback: Difficulty: EasyPage: 214
Question 8 Multiple Choice 1 of 1 point(s)
Which of the following factors is not one of the factors identified in the textbook that alters the relative attractiveness of exporting, licensing, and FDI?
Your Answer: Tax implications
Correct Answer: Tax implications
Feedback: Difficulty: MediumPage: 224-226
Question 9 Multiple Choice 0 of 1 point(s)
According to economic theory, there are three reasons the market does not always work well as a mechanism for selling know-how. Which of the following is not one of these reasons?
Your Answer: Licensing does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to profitably exploit its advantage in know-how
Correct Answer: Uncertainties in tariff rates make licensing unattractive, particularly if tariff rates go up
Feedback: Difficulty: HardPage: 224-225
Question 10 Multiple Choice 1 of 1 point(s)
One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries.
Your Answer: F.T. Knickerbocker
Correct Answer: F.T. Knickerbocker
Feedback: Difficulty: MediumPage: 226
Question 1 Multiple Choice 1 of 1 point(s)
The total amount of capital invested in factories, stores, office buildings, and the like is summarized by:
Your Answer: gross fixed capital formation
Correct Answer: gross fixed capital formation
Feedback: Difficulty: MediumPage: 219
Question 2 True/False 1 of 1 point(s)
F.T. Knickerbocker looked at the relationship between FDI and rivalry in oligopolistic industries.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 226
Question 3 True/False 1 of 1 point(s)
The flow of FDI refers to the total accumulated value of foreign-owned assets at any given time.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: EasyPage: 215
Question 4 Multiple Choice 1 of 1 point(s)
Although it normally involves much longer-term commitments, franchising is essentially the service industry version of:
Your Answer: licensing.
Correct Answer: licensing.
Feedback: Difficulty: MediumPage: 232
Question 5 True/False 1 of 1 point(s)
Gross fixed capital formation summarizes the total amount of capital invested in factories, stores, office buildings, and the like.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 219
Question 6 True/False 1 of 1 point(s)
The establishment of a wholly new operation in a foreign country is referred to as a green-field investment.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 214
Question 7 Multiple Choice 0 of 1 point(s)
According to internalization theory, licensing has three major drawbacks as a strategy for exploiting foreign market opportunities. Each of the following is a drawback of licensing except:
Your Answer: licensing does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability.
Correct Answer: licensing helps a firm avoid making a direct foreign investment in a foreign country.
Feedback: Difficulty: HardPage: 224-226
Question 8 True/False 1 of 1 point(s)
The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: EasyPage: 215
Question 9 Multiple Choice 1 of 1 point(s)
Which of the following factors is not one of the factors identified in the textbook that alters the relative attractiveness of exporting, licensing, and FDI?
Your Answer: Tax implications
Correct Answer: Tax implications
Feedback: Difficulty: MediumPage: 224-226
Question 10 True/False 1 of 1 point(s)
Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 223
Question 1 Multiple Choice 1 of 1 point(s)
If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of
Your Answer: foreign direct investment.
Correct Answer: foreign direct investment.
Feedback: Difficulty: MediumPage: 214
Question 2 True/False 1 of 1 point(s)
A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: HardPage: 225
Question 3 Multiple Choice 1 of 1 point(s)
When _______, a firm will favor FDI over exporting as an entry strategy, according to the textbook.
Your Answer: transportation costs or trade barriers make exporting unattractive
Correct Answer: transportation costs or trade barriers make exporting unattractive
Feedback: Difficulty: HardPage: 224
Question 4 True/False 0 of 1 point(s)
In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions.
Your Answer: true
Correct Answer: false
Feedback: Difficulty: MediumPage: 221
Question 5 Multiple Choice 1 of 1 point(s)
When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____ occurs.
Your Answer: foreign direct investment
Correct Answer: foreign direct investment
Feedback: Difficulty: EasyPage: 214
Question 6 Multiple Choice 0 of 1 point(s)
In the international business literature, the marketing imperfection approach to FDI is typically referred to as:
Your Answer: international commerce theory
Correct Answer: internalization theory
Feedback: Difficulty: MediumPage: 224
Question 7 True/False 1 of 1 point(s)
Once a firm undertakes FDI for more than two years, it becomes a multinational enterprise.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: EasyPage: 214
Question 8 True/False 1 of 1 point(s)
Most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the others' markets.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 217
Question 9 Multiple Choice 1 of 1 point(s)
__________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes.
Your Answer: Forward vertical
Correct Answer: Forward vertical
Feedback: Difficulty: MediumPage: 229
Question 10 Multiple Choice 1 of 1 point(s)
Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____.
Your Answer: exporting, FDI and licensing
Correct Answer: exporting, FDI and licensing
Feedback: Difficulty: MediumPage: 224
Question 1 Multiple Choice 0 of 1 point(s)
The investment by individuals, firms, or public bodies in foreign financial instruments is referred to as:
Your Answer: foreign indirect investment
Correct Answer: foreign portfolio investment
Feedback: Difficulty: MediumPage: 214
Question 2 Multiple Choice 1 of 1 point(s)
The eclectic paradigm has been championed by the British economist __________.
Your Answer: John Dunning
Correct Answer: John Dunning
Feedback: Difficulty: MediumPage: 228
Question 3 True/False 1 of 1 point(s)
A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: HardPage: 225
Question 4 True/False 1 of 1 point(s)
Since World War II, Great Britain has traditionally been by far the largest source country for FDI.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 220
Question 5 True/False 1 of 1 point(s)
Foreign direct investment occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: EasyPage: 214
Question 6 Multiple Choice 1 of 1 point(s)
According to the textbook, a firm will favor ______ over _____ when it wishes to maintain control over its technological know-how, or over its operations and business strategy.
Your Answer: foreign direct investment, licensing
Correct Answer: foreign direct investment, licensing
Feedback: Difficulty: HardPage: 225
Question 7 True/False 1 of 1 point(s)
A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: MediumPage: 224
Question 8 Multiple Choice 1 of 1 point(s)
FDI is growing more rapidly than:
Your Answer: world trade and world output
Correct Answer: world trade and world output
Feedback: Difficulty: MediumPage: 215
Question 9 Multiple Choice 1 of 1 point(s)
According to our textbook, _____ are the main source of impediments to the free flow of products between nations.
Your Answer: governments
Correct Answer: governments
Feedback: Difficulty: MediumPage: 224
Question 10 True/False 1 of 1 point(s)
The eclectic paradigm is a theory of FDI that combines two other perspectives into a single holistic explanation of FDI.
Your Answer: true
Correct Answer: true
Feedback: Difficulty: HardPage: 228
Question 1 Multiple Choice 1 of 1 point(s)
When Starbucks invested $10 million in Starbucks Coffee of Japan in 1996, it was engaging in:
Your Answer: foreign direct investment
Correct Answer: foreign direct investment
Feedback: Difficulty: MediumPage: 213
Question 2 Multiple Choice 1 of 1 point(s)
High transportation costs and/or tariffs imposed on imports help explain why many firms prefer ______ over ______.
Your Answer: foreign direct investment or licensing, exporting
Correct Answer: foreign direct investment or licensing, exporting
Feedback: Difficulty: HardPage: 224
Question 3 Multiple Choice 1 of 1 point(s)
FDI is an acronym that stands for
Your Answer: Foreign Direct Investment.
Correct Answer: Foreign Direct Investment.
Feedback: Difficulty: EasyPage: 214
Question 4 True/False 1 of 1 point(s)
The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: EasyPage: 215
Question 5 Multiple Choice 1 of 1 point(s)
The ______ approach points to the importance of investments in specialized assets and imperfections in the market for know-how as factors that increase the relative attractiveness of vertical FDI.
Your Answer: market imperfections
Correct Answer: market imperfections
Feedback: Difficulty: HardPage: 233
Question 6 Multiple Choice 0 of 1 point(s)
Historically, most backward vertical FDI has been in:
Your Answer: services industries
Correct Answer: extractive industries
Feedback: Difficulty: MediumPage: 229
Question 7 Multiple Choice 0 of 1 point(s)
The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001.
Your Answer: 60
Correct Answer: 70
Feedback: Difficulty: HardPage: 221
Question 8 True/False 1 of 1 point(s)
Foreign portfolio investment involves taking a significant equity stake in a foreign business entity.
Your Answer: false
Correct Answer: false
Feedback: Difficulty: MediumPage: 214
Question 9 Multiple Choice 1 of 1 point(s)
When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that have a(n)
Your Answer: low value-to-weight ratio.
Correct Answer: low value-to-weight ratio.
Feedback: Difficulty: HardPage: 224
Question 10 Multiple Choice 1 of 1 point(s)
When two or more enterprises encounter each other in different regional markets, national markets, or industries, _______ arises.
Your Answer: multipoint competition
Correct Answer: multipoint competition
Feedback: Difficulty: MediumPage: 227
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