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Global Business Today 10Th Edition Hill Test Bank Full Chapter PDF
Global Business Today 10Th Edition Hill Test Bank Full Chapter PDF
Global Business Today 10Th Edition Hill Test Bank Full Chapter PDF
Test Bank
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Hill GBT 10e
1. When a firm exports its products to a foreign country, foreign direct investment occurs.
FALSE
Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or
market a product in a foreign country. According to the U.S. Department of Commerce, FDI
occurs whenever a U.S. citizen, organization, or affiliated group takes an interest of 10 percent
or more in a foreign business entity.
2. The stock of foreign direct investment refers to the total accumulated value of foreign-owned
assets at a given time.
TRUE
The stock of foreign direct investment refers to the total accumulated value of foreign-owned
assets at a given time.
8-1
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Learning Objective: 08-01 Recognize current trends regarding foreign direct investment (FDI) in the world economy.
Topic: Foreign Direct Investment in the World Economy
3. The globalization of the world economy is having a negative effect on the volume of FDI.
FALSE
The globalization of the world economy is having a positive effect on the volume of FDI. Many
firms now see the whole world as their market, and they are undertaking FDI in an attempt to
make sure they have a significant presence in many regions of the world.
4. Historically, most FDI has been directed at the least developed nations of the world.
FALSE
Historically, most FDI has been directed at the developed nations of the world as firms based in
advanced countries invested in the others' markets. During the 1980s and 1990s, the United
States was often the favorite target for FDI inflows.
8-2
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5. When a firm allows another enterprise to produce its products under license, the licensee bears
the costs or risks.
TRUE
When a firm exports, it need not bear the costs associated with FDI, and it can reduce the risks
associated with selling abroad by using a native sales agent. Similarly, when a firm allows
another enterprise to produce its products under license, the licensee bears the costs or risks.
6. The attractiveness of exporting increases in comparison to FDI or licensing when products have
a low value-to-weight ratio.
FALSE
The viability of an exporting strategy is often constrained by transportation costs and trade
barriers. 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 low
value-to-weight ratio and that can be produced in almost any location. For such products, the
attractiveness of exporting decreases, relative to either FDI or licensing.
8-3
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7. By placing tariffs on imported goods, governments can increase the cost of exporting relative
to foreign direct investment and licensing.
TRUE
Transportation costs aside, some firms undertake foreign direct investment as a response to
actual or threatened trade barriers such as import tariffs or quotas. By placing tariffs on
imported goods, governments can increase the cost of exporting relative to foreign direct
investment and licensing. Similarly, by limiting imports through quotas, governments increase
the attractiveness of FDI and licensing.
FALSE
8-4
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9. Multipoint competition arises when two or more enterprises encounter each other in different
regional markets, national markets, or industries.
TRUE
10. According to the extreme version of radical view, no country should ever permit foreign
corporations to undertake FDI, because they can never be instruments of economic
development, only of economic domination.
TRUE
Radical writers argue that the multinational enterprise (MNE) is an instrument of imperialist
domination. According to the radical view, FDI by the MNEs of advanced capitalist nations
keeps the less developed countries of the world relatively backward and dependent on
advanced capitalist nations for investment, jobs, and technology. Thus, according to the
extreme version of this view, no country should ever permit foreign corporations to undertake
FDI, because they can never be instruments of economic development, only of economic
domination. Where MNEs already exist in a country, they should be immediately nationalized.
8-5
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Learning Objective: 08-03 Understand how political ideology shapes a government's attitudes toward FDI.
Topic: Political Ideology and Foreign Direct Investment
11. According to the free market view, countries should specialize in the production of those goods
and services that they can produce most efficiently.
TRUE
The free market view argues that international production should be distributed among
countries according to the theory of comparative advantage. Countries should specialize in the
production of those goods and services that they can produce most efficiently.
12. According to the pragmatic nationalist view, no country should ever permit foreign
corporations to undertake FDI.
FALSE
According to the radical view, no country should ever permit foreign corporations to undertake
FDI, since they can never be instruments of economic development, only of economic
domination. In practice, many countries have adopted neither a radical policy nor a free market
policy toward FDI, but instead a policy that can best be described as pragmatic nationalism. The
pragmatic nationalist view is that FDI has both benefits and costs.
8-6
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13. The indirect employment effects of FDI are often as large as, if not larger than, the direct
effects.
TRUE
The effects of FDI on employment are both direct and indirect. Direct effects arise when a
foreign MNE employs a number of host-country citizens. Indirect effects arise when jobs are
created in local suppliers as a result of the investment and when jobs are created because of
increased local spending by employees of the MNE. The indirect employment effects are often
as large as, if not larger than, the direct effects.
14. Services such as telecommunications, retailing, and many financial services, where the service
has to be produced where it is delivered, lend themselves well to exporting.
FALSE
FDI's impact on competition in domestic markets may be particularly important in the case of
services, such as telecommunications, retailing, and many financial services, where exporting is
often not an option because the service has to be produced where it is delivered.
8-7
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15. An acquisition does not result in a net increase in the number of players in a market.
TRUE
An acquisition does not result in a net increase in the number of players in a market; the effect
on competition may be neutral. When a foreign investor acquires two or more firms in a host
country, and subsequently merges them, the effect may be to reduce the level of competition
in that market, create monopoly power for the foreign firm, reduce consumer choice, and raise
prices.
16. Offshore production refers to FDI undertaken to serve the host market.
FALSE
International trade theory tells us that home-country concerns about the negative economic
effects of offshore production may be misplaced. The term offshore production refers to FDI
undertaken to serve the home market.
8-8
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17. Many investor nations now have government-backed insurance programs to cover major types
of foreign investment risk like the risks of expropriation (nationalization), war losses, and the
inability to transfer profits back home.
TRUE
Many investor nations now have government-backed insurance programs to cover major types
of foreign investment risk. The types of risks insurable through these programs include the risks
of expropriation (nationalization), war losses, and the inability to transfer profits back home.
Such programs are particularly useful in encouraging firms to undertake investments in
politically unstable countries.
18. Ownership restraints and performance requirements are the two most common ways in which
host governments restrict FDI.
TRUE
Host governments use a wide range of controls to restrict FDI in one way or another. The two
most common are ownership restraints and performance requirements.
8-9
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19. Performance requirements are controls over the behavior of the MNE's local subsidiary.
TRUE
Performance requirements can also take several forms. Performance requirements are controls
over the behavior of the MNE's local subsidiary. The most common performance requirements
are related to local content, exports, technology transfer, and local participation in top
management.
TRUE
The WTO embraces the promotion of international trade in services. Because many services
have to be produced where they are sold, exporting is not an option. Given this, the WTO has
become involved in regulations governing FDI.
8-10
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21. The location-specific advantages argument associated with John Dunning helps explain why
firms prefer FDI to licensing or to exporting.
FALSE
The implications of the theories of FDI for business practice are straightforward. First, the
location-specific advantages argument associated with John Dunning does help explain the
direction of FDI. However, the location-specific advantages argument does not explain why
firms prefer FDI to licensing or to exporting.
22. Licensing is not a good option if the competitive advantage of a firm is based upon managerial
or marketing knowledge that is embedded in the routines of the firm or the skills of its
managers, and that is difficult to codify in a "book of blueprints."
TRUE
Licensing is not a good option if the competitive advantage of a firm is based upon managerial
or marketing knowledge that is embedded in the routines of the firm or the skills of its
managers, and that is difficult to codify in a "book of blueprints." This would seem to be the
case for firms based in a fairly wide range of industries.
8-11
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23. Franchising is essentially the service-industry version of licensing, although it normally involves
much longer-term commitments than licensing.
TRUE
24. Despite the move toward a free market stance in recent years, many countries still have a rather
pragmatic stance toward FDI.
TRUE
Despite the move toward a free market stance in recent years, many countries still have a rather
pragmatic stance toward FDI. In such cases, a firm considering FDI must often negotiate the
specific terms of the investment with the country's government.
8-12
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25. A firm's bargaining power is low when the host government places a low value on what the firm
has to offer.
TRUE
From the perspective of a firm negotiating the terms of an investment with a host government,
the firm's bargaining power is high when the host government places a high value on what the
firm has to offer, the number of comparable alternatives open to the firm is greater, and the
firm has a long time in which to complete the negotiations. The converse also holds. The firm's
bargaining power is low when the host government places a low value on what the firm has to
offer, the number of comparable alternatives open to the firm is fewer, and the firm has a short
time in which to complete the negotiations.
8-13
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26. A computer manufacturing firm from the United States invests in a microprocessor
manufacturing plant in Taiwan. This is an example of
A. insourcing.
B. stock consolidation.
C. foreign direct investment.
D. product differentiation.
E. market segmentation.
Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or
market a product in a foreign country.
27. According to the U.S. Department of Commerce, which of the following, occurs whenever a U.S.
citizen, organization, or affiliated group takes an interest of 10 percent or more in a foreign
business entity?
A. multilateral investment
B. foreign direct investment
C. reciprocal foreign investment
D. international divestment
E. asset divestment
Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or
market a product in a foreign country. According to the U.S. Department of Commerce, FDI
occurs whenever a U.S. citizen, organization, or affiliated group takes an interest of 10 percent
or more in a foreign business entity.
8-14
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Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 08-01 Recognize current trends regarding foreign direct investment (FDI) in the world economy.
Topic: Introduction
28. Omega, Inc., a U.S. business entity took a 27 percent equity interest in Almodovar Holdings, a
Spanish family business. According to the U.S. Department of Commerce, this would be an
example of
A. multilateral investment
B. foreign direct investment
C. reciprocal foreign investment
D. international divestment
E. asset divestment
Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or
market a product in a foreign country. According to the U.S. Department of Commerce, FDI
occurs whenever a U.S. citizen, organization, or affiliated group takes an interest of 10 percent
or more in a foreign business entity.
8-15
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29. Once it undertakes FDI, a firm becomes a(n)
A. outsourcer.
B. retail chain.
C. offshore company.
D. multinational enterprise.
E. national corporation.
Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or
market a product in a foreign country. Once a firm undertakes FDI, it becomes a multinational
enterprise.
30. Which of the following is most likely to involve establishment of a new operation in a foreign
country?
A. consolidation
B. greenfield investment
C. acquisition
D. licensing agreement
E. mass customization
FDI takes on two main forms. The first is a greenfield investment, which involves the
establishment of a new operation in a foreign country. The second involves acquiring or
merging with an existing firm in the foreign country.
8-16
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Learning Objective: 08-01 Recognize current trends regarding foreign direct investment (FDI) in the world economy.
Topic: Introduction
31. Rather than acquiring Almodovar Holdings in Spain, Omega, Inc. chose to establish new
operations in that country. This form of FDI is called
A. consolidation
B. greenfield investment
C. acquisition
D. licensing agreement
E. mass customization
FDI takes on two main forms. The first is a greenfield investment, which involves the
establishment of a new operation in a foreign country. The second involves acquiring or
merging with an existing firm in the foreign country.
8-17
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32. Which of the following indicates that a firm has a full outright stake in an acquisition?
Acquisitions can be a minority (where the foreign firm takes a 10 percent to 49 percent interest
in the firm's voting stock), majority (foreign interest of 50 percent to 99 percent), or full outright
stake (foreign interest of 100 percent).
33. Which of the following refers to the amount of FDI undertaken over a given period (normally a
year)?
A. portfolio
B. flow
C. status
D. stock
E. fragment
The flow of FDI refers to the amount of FDI undertaken over a given time period (normally a
year). We also talk of outflows of FDI, meaning the flow of FDI out of a country, and inflows of
FDI, the flow of FDI into a country.
8-18
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Learning Objective: 08-01 Recognize current trends regarding foreign direct investment (FDI) in the world economy.
Topic: Foreign Direct Investment in the World Economy
34. At the end of 2015, companies from the country of Erithrea collectively owned $37 billion in
assets in its neighboring country of Outflowia. The $37 billion is Erithrea’s _______ of FDI.:
A. stock
B. flow
C. outflow
D. trend.
E. exchange.
The stock of FDI refers to the total accumulated value of foreign-owned assets at a given time.
35. Which of the following statements is true regarding foreign direct investment?
A. The flow of FDI refers to the total accumulated value of foreign-owned assets at a given
time.
B. FDI has grown more rapidly than world trade and world output.
C. The general shift toward democratic political institutions has discouraged FDI.
D. Generally, free market economies oppose FDI.
E. The globalization of the world economy is having a negative effect on the volume of FDI.
In general, however, over the past 30 years the flow of FDI has accelerated faster than the
growth in world trade and world output. For example, between 1992 and 2014, the total flow of
FDI from all countries increased around ninefold while world trade by value grew fourfold and
world output by around 60 percent.
8-19
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Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 08-01 Recognize current trends regarding foreign direct investment (FDI) in the world economy.
Topic: Foreign Direct Investment in the World Economy
36. Why has FDI grown more rapidly than world trade?
A. The decline in trade barriers has erased the fear of protectionist pressures.
B. Executives of business firms see FDI as a way of circumventing future trade barriers.
C. There has been a general shift toward radical and totalitarian political institutions.
D. Privatization has made developing nations less attractive for multinational enterprises.
E. There has been a general shift toward centrally planned command economies.
FDI has grown more rapidly than world trade and world output for several reasons. First,
despite the general decline in trade barriers over the past 30 years, firms still fear protectionist
pressures. Executives see FDI as a way of circumventing future trade barriers. Second, much of
the increase in FDI has been driven by the political and economic changes that have been
occurring in many of the world's developing nations. The general shift toward democratic
political institutions and free market economies has encouraged FDI. Across much of Asia,
eastern Europe, and Latin America, economic growth, economic deregulation, privatization
programs that are open to foreign investors, and removal of many restrictions on FDI have
made these countries more attractive to foreign multinationals.
8-20
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37. The United States has been an attractive target for FDI partly because of its
The United States has been an attractive target for FDI because of its large and wealthy
domestic markets, its dynamic and stable economy, a favorable political environment, and the
openness of the country to FDI. Investors include firms based in Great Britain, Japan, Germany,
Holland, and France. Inward investment into the United States remained high during the 2000s
and stood at $92 billion in 2014.
8-21
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38. Which of the following is true regarding the inflow of FDI?
A. Even though developing nations still account for the largest share of FDI inflows, FDI into
developed nations has increased markedly.
B. Africa has historically been the largest recipient of inward FDI.
C. The United Kingdom and France have historically been the smallest recipients of inward FDI.
D. There has been an increase in the importance of China as a recipient of FDI.
E. Latin America is the least important region in the developing world for FDI inflows.
Even though developed nations still account for the largest share of FDI inflows, FDI into
developing nations has increased markedly. Most recent inflows into developing nations have
been targeted at the emerging economies of Southeast Asia. Driving much of the increase has
been the growing importance of China as a recipient of FDI, which attracted about $60 billion
of FDI in 2004 and rose steadily to hit a record $128 billion in 20144.
8-22
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39. Countries such as the United States, the United Kingdom, France, Germany, the Netherlands,
and Japan dominate in the share of total global stock of FDI and FDI outflows and in rankings
of the world's largest multinationals because they
A. were the most developed countries postwar and home to the largest and best capitalized
enterprises.
B. pursued a policy of blocking or restricting FDI inflow into their own economies.
C. provided subsidies for their domestic firms to protect them from foreign competition.
D. control much of the operating structure of the WTO which governs international trade.
E. were the governing body of the International Monetary Fund.
The United States and other developed nations dominate in total global stock of FDI, FDI
outflows, and rankings of largest multinationals primarily because they were the most
developed nations with the largest economies during much of the postwar period and
therefore home to many of the largest and best capitalized enterprises.
8-23
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40. General Electric (GE) built an operation from scratch in Nigeria. This is an example of a(n)
A. merger.
B. acquisition.
C. strategic alliance.
D. FDI stock.
E. greenfield investment.
FDI takes on two main forms. The first is a greenfield investment, which involves the
establishment of a new operation in a foreign country. The second involves acquiring or
merging with an existing firm in a foreign country..
41. Omega, Inc. produces an entire line of stationery products at its manufacturing facility in the
U.S. and then ships all over Europe for sale. Omega, Inc. is
A. outsourcing.
B. licensing.
C. franchising.
D. exporting.
E. diversifying.
Exporting, as opposed to importing, involves producing goods at home and then shipping
them to the receiving country for sale.
8-24
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Topic: Theories of Foreign Direct Investment
42. Sphericals, Inc. approach to international markets is to grant a foreign entity the right to
produce and sell the firm’s product in return for a royalty fee on every unit sold. Sphericals,
Inc.’s approach is called
A. outsourcing
B. licensing
C. franchising
D. exporting
E. diversifying
Licensing involves granting a foreign entity (the licensee) the right to produce and sell the firm’s
product in return for a royalty fee on every unit sold.
8-25
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43. The Spanish company, Almodovar Family Holdings obtained the right to produce and sell the
U.S.-based Omega, Inc.’s products in Spain in return for a royalty fee to Omega, Inc. on every
unit it sells in Spain. Almodovar Family Holdings is Omega, Inc.’s
A. franchisor.
B. franchisee.
C. licensor.
D. licensee.
E. competitor.
Licensing involves granting a foreign entity (the licensee) the right to produce and sell the firm’s
product in return for a royalty fee on every unit sold.
44. 3M, an American firm, manufactures adhesive tapes in St. Paul, Minnesota, and ships the tapes
to South Korea for sale. According to this information, which of the following is being done by
3M?
A. exporting
B. licensing
C. franchising
D. insourcing
E. outsourcing
Exporting involves producing goods at home and then shipping them to the receiving country
for sale.
8-26
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Difficulty: 3 Hard
Learning Objective: 08-02 Explain the different theories of FDI.
Topic: Theories of Foreign Direct Investment
45. As a company policy, Alberton Consumer Products periodically grants foreign entities the right
to produce and sell its products in return for a royalty fee on every unit sold. Alberton
Consumer Products’ approach is
A. outsourcing.
B. exporting.
C. licensing.
D. diverging.
E. hedging.
Licensing involves granting a foreign entity (the licensee) the right to produce and sell the firm's
product in return for a royalty fee on every unit sold.
8-27
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46. When it comes to FDI, Granular Holdings, Inc. makes greenfield investments in various foreign
countries and fully manages all foreign operations on its own. Granular Holdings’ FDI approach
is risky because of the problems associated with
FDI is risky because of the problems associated with doing business in a different culture where
the rules of the game may be very different. Relative to indigenous firms, there is a greater
probability that a foreign firm undertaking FDI in a country for the first time will make costly
mistakes due to its ignorance.
47. When it comes to foreign markets, Matthews Toys identifies licensees in various countries who
produce and sell the company’s products in their countries in return for a royalty fee on every
unit sold. Matthews Toys’ approach is risky because of the problems associated with
Licensing may result in a firm’s giving away valuable technological know-how to a potential
8-28
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foreign competitor.
48. Jingo Products is a market leader in playground equipment which is typically large and bulky
and weighs a lot. Because of competitive reasons, Jingo Products sells its entire line at very low
prices. Although its products can be produced anywhere, it is considering exporting as a way
to grow in overseas markets. The viability of Jingo Products’ exporting strategy could be
constrained by transportation costs, particularly of products that can be produced in almost any
location and have a
8-29
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49. Which of the following is one of the limitations of exporting that leads companies to prefer FDI
over exporting?
Some firms undertake foreign direct investment as a response to actual or threatened trade
barriers such as import tariffs or quotas. The desire to reduce the threat that trade barriers
might be imposed is enough to justify foreign direct investment as an alternative to exporting.
50. A firm will favor FDI over exporting as an entry strategy when
The viability of an exporting strategy is often constrained by transportation costs and trade
barriers. When transportation costs are added to production costs, it becomes unprofitable to
ship some products over a large distance. The desire to reduce the threat that trade barriers
might be imposed is enough to justify foreign direct investment as an alternative to exporting.
8-30
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Difficulty: 2 Medium
Learning Objective: 08-02 Explain the different theories of FDI.
Topic: Theories of Foreign Direct Investment
51. Arnold & Sons, a leading manufacturer of cement in the U.S is considering exporting as its FDI
strategy. Exporting may not be a good option for Arnold & Sons because of cement’s
Cement has a low value-to-weight ratio. 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 low value-to-weight ratio and that can be produced in almost any
location.
8-31
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52. Incandescent Lightings, a U.S.-based firm does not want to bear the costs of establishing
production facilities in a foreign country. Incandescent Lightings should avoid
A. exporting.
B. FDI.
C. licensing.
D. franchising.
E. outsourcing.
FDI, as opposed to exporting or licensing, is expensive because a firm must bear the costs of
establishing production facilities in a foreign country or of acquiring a foreign enterprise.
A. FDI.
B. importing.
C. franchising.
D. outsourcing.
E. licensing.
By placing tariffs on imported goods, governments can increase the cost of exporting relative
to foreign direct investment and licensing. Similarly, by limiting imports through quotas,
governments increase the attractiveness of FDI and licensing.
8-32
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Topic: Theories of Foreign Direct Investment
54. The argument that firms prefer FDI over licensing to retain control over know-how,
manufacturing, marketing, and strategy or because some firm capabilities are not amenable to
licensing constitutes the
A branch of economic theory known as internalization theory seeks to explain why firms often
prefer foreign direct investment over licensing as a strategy for entering foreign markets (this
approach is also known as the market imperfections approach). It argues that firms prefer FDI
over licensing to retain control over know-how, manufacturing, marketing, and strategy or
because some firm capabilities are not amenable to licensing.
55. Ohio Manufacturing prefers FDI over licensing to retain control over know-how, manufacturing,
and marketing. Ohio Manufacturing’s stance constitutes the
A branch of economic theory known as internalization theory seeks to explain why firms often
prefer foreign direct investment over licensing as a strategy for entering foreign markets (this
8-33
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approach is also known as the market imperfections approach). It argues that firms prefer FDI
over licensing to retain control over know-how, manufacturing, marketing, and strategy or
because some firm capabilities are not amenable to licensing.
A. the disadvantages associated with the adoption of a completely free market view.
B. why different nations import goods from other countries even when they are more capable
of producing them efficiently.
C. the preference for FDI over licensing by firms as a strategy to enter foreign markets.
D. the benefits of exercising protectionism coupled with partial adoption of free market
approach.
E. the pattern of sale of products from one country to another.
A branch of economic theory known as internalization theory seeks to explain why firms often
prefer foreign direct investment over licensing as a strategy for entering foreign markets. This
approach is also known as the market imperfections approach.
57. The top management team at the Kentucky-based Mumford Products collectively support the
market imperfections approach. This means Mumford Products’ top management team is most
likely to
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McGraw-Hill Education.
A. adopt a completely free market view.
B. understand why different nations import goods from other countries even when they are
more capable of producing them efficiently.
C. express a preference for FDI over licensing as a strategy to enter foreign markets.
D. propagate the benefits of exercising protectionism coupled with partial adoption of free
market approach.
E. abandon going overseas.
A branch of economic theory known as internalization theory seeks to explain why firms often
prefer foreign direct investment over licensing as a strategy for entering foreign markets. This
approach is also known as the market imperfections approach.
8-35
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McGraw-Hill Education.
58. Which of the following reflects internalization theory?
A. Licensing gives a firm the tight control over manufacturing, marketing, and strategy in a
foreign country that may be required to maximize its profitability.
B. Licensing may result in a firm's giving away valuable technological know-how to a potential
foreign competitor.
C. Licensing has no major drawbacks as a strategy for exploiting foreign market opportunities.
D. A problem with licensing arises when the firm's competitive advantage is based much on its
products rather than on the management, marketing, and manufacturing capabilities that
produce those products.
E. Licensing is more profitable than FDI.
According to internalization theory, licensing has three major drawbacks as a strategy for
exploiting foreign market opportunities. First, licensing may result in a firm's giving away
valuable technological know-how to a potential foreign competitor. A second problem is that
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. A third problem with
licensing arises when the firm's competitive advantage is based not as much on its products as
on the management, marketing, and manufacturing capabilities that produce those products.
The problem here is that such capabilities are often not amenable to licensing.
8-36
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
59. According to internalization theory, one of the drawbacks of licensing is that
A problem with licensing is that it 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.
The rationale for wanting control over the strategy of a foreign entity is that, unlike a wholly
owned subsidiary, a licensee would probably not accept impositions, because it would likely
reduce the licensee's profit, or it might even cause the licensee to take a loss.
8-37
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McGraw-Hill Education.
60. A firm is most likely to favor foreign direct investment over exporting when
It follows that a firm will favor foreign direct investment over exporting as an entry strategy
when transportation costs or trade barriers make exporting unattractive. Furthermore, the firm
will favor foreign direct investment over licensing (or franchising) when it wishes to maintain
control over its technological know-how, or over its operations and business strategy, or when
the firm's capabilities are simply not amenable to licensing, as may often be the case.
8-38
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McGraw-Hill Education.
61. The strategic behavior theory is used to
Strategic behavior theory is based on the idea that FDI flows are a reflection of strategic rivalry
between firms in the global marketplace. An early variant of this argument was expounded by
F. T. Knickerbocker, who looked at the relationship between FDI and rivalry in oligopolistic
industries.
8-39
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McGraw-Hill Education.
62. The cement market in Erbia is dominated by four firms. These firms control 85 percent of selling
and buying of the domestic market. Which of the following terms explains the market structure
of the cement industry in Erbia?
A. perfect competition
B. onopoly
C. oligopoly
D. dual monopoly
E. monopsony
8-40
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Learning Objective: 08-02 Explain the different theories of FDI.
Topic: Theories of Foreign Direct Investment
64. If one firm in an oligopoly cuts prices, then most likely, its competitors will
A. make profits.
B. also respond with similar price cuts.
C. correspondingly raise prices.
D. capture additional market share.
E. not be impacted by the price cuts.
8-41
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McGraw-Hill Education.
65. The interdependence between firms in an oligopoly leads to
A. trade wars.
B. a decrease in the supply.
C. imitative behavior.
D. higher demand.
E. increased domestic consumption.
8-42
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
66. QFresh, a brand for energy drinks, launched a healthy lime-based drink without preservatives.
Immediately after this, another brand, Fast Fizz, which manufactures energy drinks, also
announced the launch of a new refreshing drink without preservatives. Then Ignite, a third
brand of energy drinks, reduced the price of its apple-based drink. Which of the following is
most likely to happen in this oligopolistic market setup?
A. QFresh and Fast Fizz will reduce the prices of their respective drinks.
B. Fast Fizz will launch another new drink.
C. QFresh will link up with Ignite to launch a completely new product.
D. Fast Fizz and Ignite will collaborate against QFresh.
E. QFresh will have an increased domestic consumption.
8-43
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
67. Which of the following arises when two or more enterprises encounter each other in different
regional markets, national markets, or industries?
A. monopoly
B. monopsony
C. cartel
D. multipoint competition
E. oligopsony
Multipoint competition arises when two or more enterprises encounter each other in different
regional markets, national markets, or industries. Economic theory suggests that rather like
chess players jockeying for advantage, firms will try to match each other's moves in different
markets to try to hold each other in check.
68. Coca-Cola and PepsiCo compete against each other not only in the U.S., but also all across
Europe, Asia, and Africa. Coca-Cola and PepsiCo are
A. a monopoly.
B. engaged in
cooperation.
C. a cartel.
D. engaged in multipoint competition.
E. an oligopsony.
Multipoint competition arises when two or more enterprises encounter each other in different
regional markets, national markets, or industries. Economic theory suggests that rather like
chess players jockeying for advantage, firms will try to match each other's moves in different
markets to try to hold each other in check.
8-44
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 08-02 Explain the different theories of FDI.
Topic: Theories of Foreign Direct Investment
A. a rival does not dominate one market and use the profits from there to drive competitive
attacks elsewhere.
B. the competitors cooperate with each other to establish a cartel.
C. no other competitors can enter the market unless they resort to licensing or franchising with
the initial pioneers.
D. growing technologies or business methods in new markets are transferred to established
markets.
E. the firms in an industry prefer FDI over licensing or exporting.
Economic theory suggests that rather like chess players jockeying for advantage, firms will try to
match each other's moves in different markets to try to hold each other in check. The idea is to
ensure that a rival does not gain a commanding position in one market and then use the profits
generated there to subsidize competitive attacks in other markets.
8-45
Copyright © 2018 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
Another random document with
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„Wat! Toch niet die vent van het electrische licht, die Edison zelf, op
zijn eigen terrein, de vliegen voor den neus wegvangt?”
Nu echter nam hij den sigaar, dien hij in den mond had, tusschen de
slanke vingers van zijn rechterhand, keek een oogenblik vol aandacht
haar de witte asch, die hij in een kristallen aschbak tipte en richtte
den blik van zijn donkere oogen toen weer op het gelaat van Basil
Malwood, die vervolgde:
„Maar dat doet er minder toe—hij heeft het en dat is voldoende. Zijn
patenten zijn zoo vast en zoo secuur als huizen.
„Maar hij heeft ook nog zijn motor, een prachtige uitvinding, die op
alle trams in Amerika is ingevoerd.
„Verder zijn er nog een paar mijnen in het Westen, ergens in Arizona
of Colorado, of de hemel weet waar en een stuk of wat oliebronnen,
natuurgas en ik weet niet wat al meer.
„Spreekt gij over Silverton?” vroeg een heer, die zich juist ook bij het
clubje heeren rondom het tafeltje, kwam voegen. „Die zit ditmaal aan
den haak en komt niet zoo gauw weer los.”
„Dat hoor ik. Men zegt, dat ze aandeel heeft in alle ondernemingen
van haar broer.
„Geen roode cent bezat hij en nu moet hij voor geen veertien millioen
dollars opstaan.”
„Dan heeft Silverton geen kwaden slag geslagen, dunkt me,” liet
graaf Simkins hooren met een lonkje en lachje, dat van slimheid
moest getuigen.
„Trouwens, als zij dat niet was, zou Silverton haar zeker niet
genomen hebben. Daar staat hij immers voor bekend. Hij hecht
bijzonder aan schoonheid.
„Spelen we straks een partij?” wendde hij zich tot graaf Simkins, met
wien hij gewend was, bijna elken avond te domineeren.
„„Ik wil het allerbeste of niets, En als ik niets naar mijn zin kan krijgen,
dan zal ik mij trachten te troosten zonder levensgezellin.”
„Ik geloof, dat het voor Silverton hoog tijd werd om hier of daar wat
klein geld machtig te worden,” liet lord Crofton zich hooren. „Hoe hij
het heeft aangelegd om het zoolang zonder specie te doen, is mij een
raadsel.”
Het gesprek werd op die wijze nog eenigen tijd voortgezet. Alle
aanwezigen kenden den hertog als een zeer oppervlakkig mensch.
„En wanneer komen ze terug?” vroeg graaf Simkins, nadat nog een
reeks van vragen en antwoorden waren gewisseld ten opzichte van
de eigenaardigheden der Silvertons.
„Dat zal een heele aanwinst zijn,” liet zich nu de stem van lord
Aberdeen hooren, die tot dusverre weinig deel had genomen aan het
belangwekkend onderhoud.
Basil Malwood wendde zich tot den spreker en Basil zou moeilijk
kunnen zeggen waarom, maar er was iets in den blik, in de geheele
gelaats-uitdrukking van den lord, dat hem weerhield om een scherp
antwoord te geven.
En alsof hij het spottende glimlachje van lord Aberdeen niet had
opgemerkt, antwoordde hij:
[Inhoud]
TWEEDE HOOFDSTUK.
O, wat een verrassing.
Geheel Londen dacht en sprak over niets anders dan over den naam
en de faam van de Amerikaansche erfdochter, die zoo pas voet aan
wal had gezet op Engelschen bodem.
Men wilde alles, wat men kon, ervaren omtrent de hertogin, alvorens
in haar verheven tegenwoordigheid te verschijnen als haar nederige
bewonderaars.
Een bijna onmerkbare glimlach gleed over het gelaat van lord Edward
Lister, die als lord Aberdeen, lid van de „Club of Lords”, deze
uitnoodiging had ontvangen.
„Sinds wanneer ben jij zoo dol op de soirée’s van lady Simpson?
Vorige jaren heb je de uitnoodigingskaart altijd in de prullemand
gegooid.”
„Die opmerking van jou is zeer juist,” klonk het lachend terug, „doch
lees eens wat er nog is bijgeschreven.”
Hij voelde zich altijd zeer behagelijk, zoo in het hartje van de beste
kringen.
Basil greep de kleine, dikke hand, die hem ter verwelkoming werd
toegestoken, boog, bracht het oogglas, dat hij zich ter verhooging van
zijn belangrijkheid, kort geleden had aangeschaft, op de ware plaats
en trok zich toen bescheiden terug naar de tweede of derde linie van
opgetogen gasten, die de salons vulden.
Daar ontdekte hij op eenigen afstand van hem twee heeren, die hij
dikwijls op de „Club of Lords” had gezien.
Het waren lord Aberdeen en diens jongere neef, baron Charlton, met
welken laatste hij weleens een partij biljart had gespeeld en telkens
verloren.
Met eenige moeite wist hij zich door de gasten heen te bewegen en
eenige oogenblikken later begroette hij de beide heeren, waarop
Charly Brand al spoedig in druk gesprek met hem gewikkeld was.
„Vertel mij eens wat van de jonge hertogin,” begon hij op
fluisterenden toon. „U moet mij haar dadelijk aanwijzen, als zij komt.
U kent haar immers reeds?”
Voor geen schatten van de wereld zou hij hebben bekend, dat hij de
spiksplinternieuwe hertogin zelfs niet van aanzien kende.
„Ik ben erg verlangend, haar te zien,” sprak Charly weer. „Iedereen is
opgetogen over haar en zegt, dat [9]zij zoo’n prachtige vrouw en op
end’op Amerikaansch moet zijn.”
„Ik geloof, dat zij nog niet is aangekomen,” antwoordde Basil, met zijn
oogglas gewapend rondkijkend. Hij monsterde met een blik van
zaakkennis de aanwezigen.
Aller oogen waren gericht op haar, die thans met groote bevalligheid
haar entree maakte en die een hertogin was vanaf den juweelen
diadeem in haar kapsel, tot aan de hakjes van haar vergulde
schoentjes.
Zij was slank, donker van haar en oogen en met veel smaak gekleed,
zooals trouwens te verwachten was van een Amerikaansche
erfdochter.
Alles, wat Sir Basil Malwood in de eerste oogenblikken kon zien, was,
dat zij bevalliger en bekoorlijker was en een vorstelijker verschijning
dan hij zich had voorgesteld.
Hij zag in een oogwenk, dat zij een geboren dame was, welke
geheimzinnige verhalen er ook omtrent haar jeugd de ronde deden.
Ook lord Lister en Charly Brand hadden vol attentie naar de bevallige
Amerikaansche gekeken en Charly met zijn licht ontvlambaar
gemoed en zijn groote bewondering voor het schoone geslacht, hield
bijna den adem in en scheen in een zwijmel van bewondering te zijn
verzonken.
Maar op lord Listers aristocratisch, fijn besneden gelaat lag nog iets
anders uitgedrukt dan bewondering voor de buitengewone
schoonheid en bevalligheid dezer vrouw.
In haar gang, in haar rustige gratie was iets, dat Raffles bekend
voorkwam.
Zeker, zeker,—hij had die slanke, lenige figuur, dat hoofdje dat zich
zoo fier bewoog, meer gezien.
Maar waar?
Met haar keurig witgeborduurd schortje voor, had zij hem al dien tijd
bediend, zijn kamers gestoft, zijn kachel aangemaakt en met haar
dienstmeisje de borden gewasschen en de bedden opgemaakt.
Dat was geweest in den tijd, toen Raffles het voor zijn werk en zijn
plannen noodig had geoordeeld om, als eenvoudig burger, eenigen
tijd zijn prachtige villa in Londen te verlaten en het gewone
kamerleven te leiden in een eenvoudige omgeving.
Charly bevond zich toen voor herstel van gezondheid eenigen tijd op
het eiland Wight en de luttele maanden, welke de Groote Onbekende
in de woning van Lily Baker had doorgebracht, behoorden tot de
aangenaamste van zijn leven.
Groote sympathie had hij toen gekregen voor het beschaafde jonge
meisje, dat kalm en rustig haar plichten vervulde, in wier huis steeds
een aangename toon heerschte en die den onbemiddelden student—
want daarvoor had zij den jongen man moeten houden—met bijna
zusterlijke genegenheid had behandeld, terwijl zij altijd op
onberispelijke wijze haar waardigheid wist op te houden.
Toen had zijn blik de gewone levendigheid herkregen en sprak hij tot
Charly, die zijn oogen niet scheen te kunnen verzadigen aan de
bekoorlijke jonge vrouw:
Raffles zag, hoe Lily telkens bevallig het mooie hoofdje boog, terwijl
de eene gast na de andere aan haar werd voorgesteld.
En Charly begreep niet, hoe zijn vriend het aan zichzelf had kunnen
verkrijgen om nu reeds heen te gaan uit de nabijheid van een vrouw,
zoo beminnelijk en schoon als de jonge hertogin Silverton!
[Inhoud]
DERDE HOOFDSTUK.
Van Pensionhoudster tot Hertogin.
Een lakei nam een visitekaartje van den lord in ontvangst met de
opdracht om hem bij de hertogin aan te dienen.
De jonge vrouw las den naam, die op het kaartje vermeld was en
zag, dat daaronder geschreven stond: „een oud vriend.”
Toen de rijzige, slanke gestalte van den lord den drempel van het
kleine salon overschreed, stond Lily op van de sofa om den bezoeker
te begroeten en een uitdrukking van aangename verrassing
verscheen op haar gelaat.
Zij had in den voornamen lord Aberdeen, wiens naam zij reeds
herhaaldelijk had hooren noemen en die algemeen geacht en gezien
scheen te zijn, onmiddellijk den heer uit haar pension in
Clandonstreet herkend, de heer, die zich toen eenvoudig Mr. John
Williams had genoemd.
„Daar doet u goed aan, lord Aberdeen! Het bezoek van een ouden
bekende is een prettige afwisseling bij al de vormelijke ceremoniën!”
„Dus u hebt John Williams nog niet geheel vergeten, hertogin?” sprak
Raffles, terwijl hij het kleine, blanke handje aan zijn lippen bracht.
„Neen, lord Aberdeen, dat heb ik niet,” antwoordde de jonge vrouw,
„en het doet mij veel genoegen, dat het pension van Lily Baker ook bij
u niet tot de onaangenaamste herinneringen schijnt te behooren. Mijn
broeder en ik hebben in Amerika nog dikwijls samen over u
gesproken.”
„Ik zag u gisteravond op den soirée bij lady Simpson,” vertelde lord
Lister, „maar ik wilde u niet begroeten te midden van al die vreemden.
Daarom verliet ik de salons, voordat ik aan u werd voorgesteld.”
„Op het oogenblik is hij druk bezig met het plaatsen van motoren in
verscheiden groote mijndistricten van Nevada en Arizona. Hij
verwacht er heel veel van voor de ertsbewerking.”
„De meisjesnaam van mijn moeder was Baker en Baker had altijd op
het naambordje gestaan van het huis in Clandonstreet.
„Maar u zelf?”
Doch de hertogin had haar antwoord reeds klaar. Een antwoord, zoo
eenvoudig en helder als alles was, wat zij zeide.
„Ik had een paar honderd pond van mij zelve. Geld, dat ik gekregen
had voor de meubelen en den stand van mijn huis in Clandonstreet