Corporate Strategy and Foreign Direct Investment
CHAPTER 16
Corporate Strategy and Foreign Direct Investment
EASY (definitional)
16.1 Which of the following is likely to be a major long‑run competitive advantage of a U.S. multinational?
a) a decline in the real value of the U.S. dollar
b) access to low‑cost foreign raw materials
c) its ability to quickly adapt its products and technology in line with changing market conditions
d) offshore banking facilities located in the Gulf of Mexico
Ans: c
Section: Product and factor market imperfections
Level: Easy
16.2 In the beginning stages of the exporting process, a major challenge is the
a) Firm’s inexperienced staff
b) Lack of knowledge concerning foreign custom’s regulations
c) Fear of the unknown foreign business customs
d) ability to realize the full sales potential of a product.
Ans: d
Section: Overseas production
Level: Easy
16.3 __________ is the acquisition abroad of plant and equipment.
a) Portfolio investment
b) Financial investment
c) Foreign direct investment
d) Rationalization
Ans: c
Section: The process of overseas expansion
Level: Easy
16.4 Firms who wish to go global but who are not ready to assume significant risk may resort to __________ in order to compete internationally.
a) licensing a local firm to manufacture the company’s products
b) acquiring a local operation
c) government subsidized exporting programs
d) setting up a local factory
Ans: a
Section: The process of overseas expansion
Level: Easy
16.5 Multinationals own intangible capital in the form of __________.
a) fees and royalties
b) direct investment across industries
c) global expansion strategies
d) trademarks, patents, and general marketing skills
Ans: d
Section: Product and factor market imperfections
Level: Easy
16.6 __________ direct investment is investment that is cross-border but within an industry.
a) Horizontal
b) Vertical
c) Parallel
d) Intangible
Ans: a
Section: Product and factor market imperfections
Level:
Corporate Strategy and Foreign Direct Investment
EASY (definitional)
16.1 Which of the following is likely to be a major long‑run competitive advantage of a U.S. multinational?
a) a decline in the real value of the U.S. dollar
b) access to low‑cost foreign raw materials
c) its ability to quickly adapt its products and technology in line with changing market conditions
d) offshore banking facilities located in the Gulf of Mexico
Ans: c
Section: Product and factor market imperfections
Level: Easy
16.2 In the beginning stages of the exporting process, a major challenge is the
a) Firm’s inexperienced staff
b) Lack of knowledge concerning foreign custom’s regulations
c) Fear of the unknown foreign business customs
d) ability to realize the full sales potential of a product.
Ans: d
Section: Overseas production
Level: Easy
16.3 __________ is the acquisition abroad of plant and equipment.
a) Portfolio investment
b) Financial investment
c) Foreign direct investment
d) Rationalization
Ans: c
Section: The process of overseas expansion
Level: Easy
16.4 Firms who wish to go global but who are not ready to assume significant risk may resort to __________ in order to compete internationally.
a) licensing a local firm to manufacture the company’s products
b) acquiring a local operation
c) government subsidized exporting programs
d) setting up a local factory
Ans: a
Section: The process of overseas expansion
Level: Easy
16.5 Multinationals own intangible capital in the form of __________.
a) fees and royalties
b) direct investment across industries
c) global expansion strategies
d) trademarks, patents, and general marketing skills
Ans: d
Section: Product and factor market imperfections
Level: Easy
16.6 __________ direct investment is investment that is cross-border but within an industry.
a) Horizontal
b) Vertical
c) Parallel
d) Intangible
Ans: a
Section: Product and factor market imperfections
Level: