Answer: facial recognition software
Answer: data mining
Answer: closed-ended
Answer: begin to collect data
Answer: focus group interviews
Answer: data mining
Answer: fast responses at a lower cost
Answer: Potential bias; high cost
Answer: cross tabulation
Answer: What percentage of men and women prefer brand A over brand B?
Answer: proximity plot
Answer: frequency table
Answer: pareto diagram
Answer: dichotomous scales
Answer: interval of observations
Answer: stem and leaf display
Answer: pie chart
Answer: quartile indicators
Answer: confirmatory
Answer: 10%
Answer: data preparation
1. When the interest owed on large debts is greatly reducing profitability
2. When the company has too many businesses in slowly growing or declining industries
3. When the market shares of one of more major business units are decreasing because of superior competition.
1. getting out of businesses that are competitively weak
2. focusing corporate resources on businesses in a few, carefully selected industries
3. eliminating businesses that have poor strategic fit
Answer: True
Answer: restructure the business lineup
Answer: retrench to a narrower diversification base
1. The existing business lineup provides ample opportunity for growth
2. The current lineup reliably creates economic value for shareholders
3. The company's existing businesses match the company's diversification strategy
Answer: acquiring more businesses and building positions in new industries
Answer: resource fit
1. Divesting certain businesses and retrenching to a narrower base of business operations
2. Sticking closely with the existing business lineup and pursuing opportunities that those businesses present
3. Widening the company's business scope by making new acquisitions in new industries
Answer: true
Answer: adhere to the existing business lineup
1. Future revenue and earnings for fast growing industries usually look superior to those for slow growing industries
2. The rankings help high level executives prioritize businesses for resource support and capital investment
3. The position of different businesses in the nine-cell matrix is a good criteria for identifying high opportunity and low opportunity businesses
Answer: can be placed into four broad categories of action
1. investing in ways to strengthen or grow existing businesses
2. making acquisitions to establish positions in new industries or to complement existing businesses
3. funding long range R&D ventures aimed at opening market opportunities in new or existing businesses
1. The broader the diversification, the greater the concern that corporate executives are overburdened trying to parent too many companies
2. A company's resources can be overtaxed by making many acquisitions and calling on management to oversee many businesses quickly
3. If a company's strategy is closely tied to moving technologies from existing businesses to new ones, it must develop more resources to supply them
1. The portfolio approach relies on the premise that cash flow and investment traits vary among different businesses
2. Cash cows have limited growth but are a valuable financial resource
3. Business units in quickly expanding industries are often cash hogs
Answer: rank the performance potential of the business
Answer: internal capital market
Answer: resource fit
1. A company's resources are stretched thin in order to assimilate and oversee many new businesses in a short time
2. A mismatch exists between a diversifying company's competitive assets and the key success factors of an industry into which it is expanding
3. A core business lacks accumulated resources to deal with the competitive environment of the businesses into which it has diversified
Answer: cash flow and investment characteristics vary among businesses
1. Will leveraging a potent umbrella brand or corporate image strengthen the businesses and increase sales?
2. how much competitive value will come from the cross-business transfer of skills, technology, or intellectual capital?
3. Are the cost savings associated with economies of scope likely to give one or more businesses a cost-based advantage?
1. the company can create enough internal cash flow to provide the capital required by its businesses
2. the company can adequately fund all its businesses while keeping a good credit rating
3. each individual business sufficiently contributes to meeting companywide performance targets
Answer: an unrelated diversification strategy
1. it helps diversified companies allocate resources among their businesses
2. it identifies the business strength of businesses
3. it identifies the industry attractiveness of businesses
Answer: is important in evaluating their related diversification strategies
1. Industry attractiveness is plotted on the vertical axis
2. each axis is divided into three regions
3. competitive strength is plotted on the horizontal axis
1. To be cautious about investing in companies located intermediately on the grid
2. To concentrate resources in businesses that possess higher degrees of attractiveness and competitive strength
3. To remove resources from ventures that are low in attractiveness and strength unless they offer superior profit or cash flow opportunity
Answer: above 6.7 are strong market contenders in their industries
1. ability to match or beat rivals on key product attributes
2. costs relative to competitors' costs
3. relative market share
1. Industries that score much less than five are unlikely to be attractive
2. A strongly performing diversified company's primary businesses should be in industries with high growth potential
3. If a company's scores are all above 5, it probably operates in an attractive group of industries
Answer: competition intensity should be heavily weighted
1. Overall attractiveness and strength scores are used to plot business units, which are displayed as bubbles
2. The horizontal axis is divided into regions for strong, average, and weak competitive strength
3. The vertical axis is divided into regions for high, medium, and low attractiveness
Answer: pass the industry attractiveness test
1. Businesses with rating below 3.3 are in competitively weak market positions
2. Businesses with rating in the 3.3 to 6.7 range have moderate competitive strength
3. Business units with ratings above 6.7 are strong market contenders in their industries
1. Determining if the firm's resources fit the requirements of its current business lineup
2. Determining the competitive strength of the company's business units
3. Evaluating the individual and group attractiveness of the industries the company has diversified into
Answer: The further below 1 a business unit's relative market share is, the weaker its competitive strength and market position with its rivals
Answer: much of its revenues and profits should be derived from business units with comparatively high attractiveness scores
1. diversifying into both related and unrelated businesses
2. diversifying into unrelated businesses
3. diversifying into related businesses
1. Emerging threats and opportunities
2. Market size and projected growth rate
3. The presence of cross-industry strategic fit
1. Some companies are narrowly diversified around two to five related or unrelated businesses
2. Some multi business enterprises are diversified into unrelated areas but have a group of related businesses within each area
3. Combination related-unrelated diversification strategies are attractive to companies with a mix of valuable competitive assets.
1. how appealing is the whole group of industries in which the company has invested?
2. does each industry the company has diversified into represent a good market for the company to be in?
3. Which of the company's industries are most attractive?
Answer: builds on the same ideas and techniques used for analyzing single-business companies
Answer: it can be misguided if the growth is not profitable growth
Answer: can create only a small amount of competitive advantage beyond that which can be created by the individual businesses acting alone
Answer: a dominant business enterprise
Answer: tend to have more overall failures than successes
1. diversify into industries where the businesses can produce consistently good earning and return on investment
2. do a superior job of corporate parenting via high-level managerial oversight
3. negotiate favorable acquisition prices
1. reducing earning volatility
2. boosting managerial compensation
3. risk reduction
Answer: is especially important when credit is tight
1. Problems can occur when corporate management makes decisions for businesses they do not know well
2. A very small number of unanticipated problems or mistakes can have a major negative effect on corporate earnings
3. Most management teams are not capable of effectively managing a diversified group of unrelated businesses.
1. Often entails transferring experienced managers to the newly acquired business
2. Usually occurs when a diversified company acquires a new business that is underperforming
3. Generally involves liquidating underutilized assets
Answer: a parenting advantage
1. Parent companies can deliver funds that would otherwise be unavailable owing to poor market conditions
2. There is increased opportunity to add shareholder value because managers are privy to internal information unavailable to external financiers
3. Cross-business allocation can be especially advantageous during times fo financial market crises
1. utilizing popular umbrella brands
2. providing general resources that lower their operating costs
Answer: restructuring
1. They meet corporate targets for profitability and return on investment
2. They are big enough to significantly contribute to the parent company's bottom line
3. They are in an industry with attractive growth potential
Answer: false
Answer: is especially important when credit is tight
Answer: umbrella brands
Answer: obtaining an established company
1. They are a distinct concept from economies of scale
2. They result from strategic fit among related businesses, allowing the sharing of resources among diversified businesses
3. They are available only to firms engaging in related diversification
1. it builds shareholder value in ways that are not possible through stock ownership in a variety of industries
2. The more a company's businesses are related, the greater the company's opportunity to turn strategic fit into competitive advantage
3. Cross-business strategic fit benefits are possible only though a strategy of related diversification.
1. The sharing of cost-efficient production methods
2. The transfer of expertise in quality control
3. The consolidation of production into a smaller number of plants
1. They have similar resources and capabilities
2. They have compatible value chain activities
3. They can be combined to perform better than the sum of the individual businesses
1. in supply chain activities
2. in customer service activities
3. at various points along the value chain
Answer: they come directly from strategic fit along the value chains of related businesses
Answer: general resources
1. reducing billing costs by using common promotional tie ins
2. using a single sales force
3. promoting products on the same website
Answer: entry barriers
1. exploiting the common use of a well-known brand name
2. transferring specialized expertise from the value chain of one business to another
3. sharing costs between businesses by combining their related value chain activities into a single operation
Answer: their value chains exhibit competitively important cross-business commonalities
1. obtaining volume discounts on incoming components
2. sharing logistical resources
3. cooperating with common supply chain partners
Answer: critical resources and capabilities
1. They are leverages in related diversification
2. Their value is evident only when they are used in very specific businesses and industries
3. Their usefulness is limited in applications beyond those which they were created to serve.
Answer: acquisition
Answer: comparative cost
1. They can be combined to perform better than the sum of the individual businesses
2. They have similar resources and capabilities
3. They have compatible value chain activities.
Answer: speed
Answer: internal development
Answer: depends partially on determining the least costly mode of entry
Answer: entry barriers
1. evaluating potential targets
2. negotiating a price
3. identifying potential targets
Answer: they are usually short lives, ending as soon as the partners decide to part ways
Answer: acquisition
1. The parent company has the in-house resources needed to launch the company
2. It is cheaper to enter internally than through an acquisition
3. There is plenty of time to start the business
Answer: critical resources and capabilities
1. Is speed an important factor in the firm's chance for successful entry?
2. Which is the least costly mode of entry, given the company's objectives?
3. Are there entry barriers to overcome?
Answer: acquisition
1. corporate venturing
2. internal development
3. new venture development
Answer: internal development
Answer: depends partially on determining the least costly mode of entry
Answer: there are usually short-lives, ending as soon as partners decide to part ways
1. there is plenty of time to start the business
2. it is cheaper to enter internally than through an acquisition
3. the parent company has the in house resources needed to launch the company
Answer: critical resources and capabilities
1. Which is the least costly mode of entry, given the company's objectives
2. Are there entry barriers to overcome?
3. Is speed an important factor in the firm's chances for successful entry?
1. it is a useful way to get over entry barriers, such as building brand awareness
2. it is quicker than trying to launch a new operation
3. it allows access to hard to find resources and capabilities that work well with those of the acquiring company
1. acquisition
2. joint ventures
3. internal starup
1. when an opportunity is too complicated or risky for one company to attempt alone
2. when an opportunity in a new industry requires more know how than one company has alone
3. when diversification entails operations in a foreign country
Answer: better off test
1. corporate venturing
2. internal development
3. new venture development
1. it must give shareholders value that they cannot get by purchasing different stocks on their own
2. it must add long term economic value for shareholders
Answer: an economic justification
1. there can be high integration costs
2. integration of the company into the existing firm can be time consuming
3. there are often excessive premiums
1. broadening the scope of diversification by entering additional industries
2. sticking closely with the existing business lineup and pursuing opportunities presented by these businesses
3. retrenching to a narrower scope of diversification by divesting poorly performing businesses
Answer: acquisition
1. the industry attractiveness test
2. the cost of entry test
3. the better off test
Answer: yields added long-term economic value for shareholders
Answer: should be explored when a single business company encounters dwindling opportunities in its principal business
1. picking new industries to enter and the means for entering them
2. establishing investment priorities
3. leveraging cross-business value chain relationships into competitive advantage
Answer: avoid the market
1. pursuing mergers and acquisitions
2. employing a rapid-growth strategy
Answer: true
Answer: change the local market to match the company's core operations
Answer: tailor the packaging and product quantity to local preferences
Answer: transform into a global company in its own right
Answer: mutual restraint
1. domestic companies are familiar with the local labor force
2. domestic companies are familiar with local culture and consumer needs
Answer: cross-market
Answer: avoid the market
1. customizing its business morel to suit local circumstances
2. offering lower-priced, better products
1. better workload distribution
2. coordinated production schedules
3. adaptation to tariff and quota changes
Answer: multi market competition
Answer: a rival firm in a foreign country market has superior resources and technology
Answer: true
1. to increase its global market share
2. to attract customers
Answer: cultivate close relationships with important clients
Answer: coordination
1. buyer preference and lifestyles very from country to country
2. local brands may remain very popular no matter how well a competing brand is regarded internationally
1. share a brand name or other valuable competitive asset with all its stores
2. transfer technological know how to its international operations
1. the threat of supply interruptions
2. major customers in areas without low cost production
3. trade barriers to importing manufactured goods
1. better activities coordination
2. superior resources
3. well-trained personnel
Answer: achieve major cost savings
1. providing customers with timely service and technical support
2. lowering distribution costs
3. reducing the risks of fluctuating exchange rates
Answer: cultivate close relationships with important clients
1. a large learning curve is associated with a particular task
2. manufacturing costs are lover in a certain area
Answer: leverage subsidiary skills and capabilities
Answer: think global, act local
1. higher transportation costs
2. difficulty addressing local needs
1. centralized production and distribution
2. a global brand name
1. it can create a costly and time-consuming operation
2. it is a difficult strategy to implement
3. it involves pursuing conflicting goals
Answer: accommodate local preferences in a semi-standardized way
Answer: buyer needs for a particular product or service are relatively the same in many countries
1. coordinate efforts across country boundaries
2. create a strong headquarters to oversee its global activities
3. sell a standardized product
4. build a global brand
1. the transfer of company technological know how
2. the transfer of company resources
3. the transfer of company knowledge
1. focus competitive efforts
2. address market needs
Answer: countries
1. it won't help a company build a single international competitive advantage
2. it can raise production and distribution costs
1. cultural preferences
2. competitive conditions
3. buyer tastes
Answer: think local, act local approach
Answer: their competitive advantage
1. the demand to customize products to suit local preferences
2. the cost effectiveness of providing a standardized product globally
Answer: offering different products and services in different countries
Answer: Wholly owned subsidiary
Answer: too much dependence on a foreign market
Answer: countries
1. achieve cost savings
2. share technological know how
3. share distribution facilities
Answer: greenfield
1. avoid the risks of a Greenfield venture
2. gain access to local distribution channels
3. build supplier relationships
Answer: a local partner's expertise is less valuable than expected
Answer: quality
Answer: The company has no resources to enter a foreign market directly
1. familiarity with local government regulations
2. intimate knowledge of local buying habits and consumer preferences
3. already-established relationships with distributors
Answer: can maintain its cost competitiveness at home
1. can successfully compete with local rivals
2. costs less than an acquisition
3. can gain good distribution access
Answer: weaken the cost of competitiveness of domestic companies
Answer: wholly owned subsidiary
Answer: A conservative way to enter a foreign market
Answer: franchising strategies
1. licensing foreign firms to produce and distribute the company's products abroad
2. establishing a subsidiary in a foreign market
3. relying on joint ventures with foreign companies
Answer: it will lose control over the use of its technological know how
1. When domestic manufacturing costs are higher than those of foreign competitors
2. when shipping costs are exorbitant
3. when foreign countries impose tariffs on imports
Answer: domestic manufacturing becomes less competitive with foreign plants
1. minimize its direct investment in foreign countries
2. limit its involvement in foreign markets
Answer: maintain a domestic production base while exporting goods
Answer: true
Answer: currency exchange rate
Answer: weaken the cost competitiveness of domestic companies
Answer: customize products and services
1. reduced domestic demand for foreign made goods
2. lower prices for domestic products
1. can change by more than 20% a year
2. vary unpredictability
3.affect a company's profit
Answer: domestic manufacturing becomes less competitive with foreign plants
Answer: economic risk
1. require partial ownership of the facilities by local companies or investors
2. make a new facility's compliance with local environmental regulations very costly
3. provide government financial assistance to domestic companies
Answer: reducing the cost advantage for foreign companies
Answer: currency exchange rate
1. providing government sponsored job training
2. offering low cost business loans
Answer: political risk
1. india
2. China
1. setting up import quotas
2. imposing a ban on importation
3. enacting burdensome procedures and requirements regarding customs inspection for foreign goods
1. management
2. organization
3. strategy
1. communication
2. banking systems
3. transportation
1. relative size of the market
2. growth potential
3. domestic buyers' needs and wants
Answer: seek advise from business leaders
Answer: buyer preferences in foreign markets force companies to customize their products
1. relaxed government regulations
2. close proximity to suppliers
3. lower labor costs
Answer: exploit their core competencies
Answer: false
Answer: access supplies of raw material more cost effectively
1. availability of raw materials
2. cost of labor
Answer: increasing innovation and quality improvements
1. advantages for specific value chain activities
2. strong economic conditions
3. favorable political conditions
Answer: take advantage of new resources and capabilities
1. to gain access to new customers
2. to achieve lower costs
3. to gain access to low cost production
A. low-technology industries.
B. global oligopolies.
C. industries characterized by low cost pressures.
D. industries where transportation costs are high.
E. industries which need to have low control over foreign operations.
Answer: B. global oligopolies
A. exporting.
B. licensing.
C. foreign direct investment.
D. greenfield investment.
E. diversifying.
Answer: B. licensing
A. offer tax concessions to foreign firms that invest in their countries.
B. exclude foreign companies from specific industries.
C. require that local investors own a significant proportion of the equity in a joint venture.
D. impose high custom duties on foreign firms.
E. prohibit MNEs from joining a cartel.
Answer: A. offer tax concessions to foreign firms that invest in their countries
A. monetary restraints and prohibition on investing in certain countries.
B. voluntary export restrictions and employment restraints.
C. ownership restraints and performance requirements.
D. tax concessions and government-backed insurance.
E. employment restraints and tax deductions.
Answer: C. Ownership restraints and performance requirements
A. FDI
B. franchising
C. greenfield investment
D. exporting
E. outsourcing
Answer: D. exporting
A. onboard production
B. offshore production.
C. licensing.
D. contract manufacturing.
E. vertical integration.
Answer: B. offshore production
A. lack of funds
B. risk of transaction loss
C. poor strategic tie-ups
D. risks of expropriation
E. losses due to natural calamities
Answer: D. risks of expropriation
A. eliminated double taxation of foreign income.
B. started imposing local content requirements.
C. imposed higher import tariffs.
D. abolished the use of custom duties.
E. eliminated subsidies.
Answer: A. eliminated double taxation of foreign income
A. eliminating double taxation of foreign income
B. manipulating tax rules to encourage the firms to invest at home
C. withdrawing government-backed insurance programs provided to local investors
D. reducing interest rates earned on domestic investments
E. prohibiting organizations from entering into a cartel
Answer: B. manipulating tax rules to encourage the firms to invest at home
A. to focus on extractive industries, such as oil and gas.
B. to serve the home market.
C. in shipping industries.
D. to decrease the prices of products in the host countries.
E. to capture tax benefits in the host country.
Answer: B. to serve the home market
A. It drives down prices and increases the economic welfare of consumers.
B. It raises unemployment levels.
C. It causes firms to fight for scarce capital investments.
D. It leads to an oligopolistic market and unfair pricing.
E. It leads to decreased productivity, product and process innovations, and lesser economic growth.
Answer: A. it drives down prices and increases the economic welfare of consumers
A. It decreases the level of competition in the host country.
B. It tends to increase the prices of the products.
C. It leads to a high rate of unemployment in the long run.
D. When a foreign subsidiary imports a substantial number of its inputs from abroad, it results in a debit on the current account of the host country's balance of payments.
E. When a foreign subsidiary sends its profits to its home country, it results in the depletion of gold reserves of the host country.
Answer: D. When a foreign subsidary imports a substantial number of its inputs from abroad, it results in a debit on the current account of the host country's balance of payments
A. current
B. foreign
C. internal
D. tariff
E. savings
Answer: A. current
A. stock deficit.
B. inventory deficit.
C. external deficit.
D. tariff deficit.
E. trade deficit.
Answer: E. trade deficit
A. trade surplus.
B. current account deficit.
C. positive balance of payment.
D. economic recession.
E. net capital inflow.
Answer: B. current account deficit
A. borrowing from the IMF
B. selling assets to foreigners
C. divesting stock in domestic corporations
D. purchasing stocks, bonds, and real estate in other countries
E. issuing negotiable instruments like the bills of exchange
Answer: B. selling assets to foreigners
A. FDI does not result in job creation.
B. FDI has only indirect effects on employment in the host country.
C. The indirect employment effects of FDI are always smaller than the direct effects.
D. When FDI takes the form of an acquisition of an established enterprise in the host economy as opposed to a greenfield investment, the immediate effect is always an increase in the employment.
E. A beneficial employment effect claimed for FDI is that it brings jobs to a host country that would otherwise not be created there.
Answer: E. A beneficial employment effect claimed for FDI is that it brings jobs to a host country that would otherwise not be creaeted
A. brings in managers trained in the latest management techniques from the home country.
B. creates jobs because of increased local spending by employees of the MNE.
C. employs a number of host country citizens.
D. causes local suppliers to hire more people.
E. creates jobs in the supporting industries.
Answer: C. employs a number of host country citizens
A. a foreign MNE employs a number of host-country citizens.
B. jobs are created because of increased local spending by employees of an MNE.
C. an MNE brings in managers from the home country for its operations in the host country.
D. an MNE recruits people from the host country for research and development.
E. an MNE sends home country employees to host countries for training.
Answer: B. jobs are created because of increased local spending by employees of an MNE
A. equity
B. dematerialized
C. balance of trade
D. asset
E. balance-of-payments
Answer: E. balance-of-payments
A. pragmatic nationalism.
B. the radical view.
C. nationalism.
D. imitative theory.
E. eclectic paradigm.
Answer: A. pragmatic nationalism
A. One aspect of pragmatic nationalism is the tendency to aggressively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants.
B. The pragmatic nationalist view states that FDI always has a positive effect on the balance of payments which arises from the outflow of a foreign subsidiary's earnings and from the import of inputs from abroad.
C. According to the pragmatic nationalist view, international production should be distributed among countries based on the theory of comparative advantage.
D. According to the pragmatic nationalist view, FDI should not be allowed to enter into a country because its costs always outweigh its benefits.
E. The pragmatic nationalist view of FDI accepts the Marxist theory, and suggests that FDI by MNEs is an instrument of imperialism.
Answer: A. One aspect of pragmatic nationalism is the tendency to aggresively court FDI believed to be in the national interest by, for example, offering subsidies to foreign MNEs in the form of tax breaks or grants
A. the resource-transfer effect, the employment effect, and the balance-of-payments effect.
B. the labor-transfer effect, the technology effect, and the currency-exchange effect.
C. the cultural awareness effect, first-mover advantage effect, and economic development effect.
D. the foreign exchange reserves effect, knowledge flow effect, and the reverse resource transfer effect.
E. the employment effect, the labor-transfer effect, and the technology effect.
Answer: A. the resource-transfer effect, the employment effect, and the balance-of-payments effect
A. employment effects.
B. balance-of-payments effects.
C. effects on competition.
D. resource transfer effects.
E. autonomy effects.
Answer: D. resource transfer effects
A. eclectic paradigm theory
B. free market view
C. pragmatic nationalist view
D. radical view
E. internalization theory
Answer: C. pragmatic nationalist view
A. free trade agreements.
B. inward FDI.
C. sovereignty.
D. balance-of-payments position.
E. gold reserves.
Answer: D. balance-of-payments position
A. FDI benefits only the host country.
B. FDI does not make any positive contribution to the host economy.
C. every country should adopt the free market view.
D. FDI should not be allowed by any country as it is an instrument of economic domination rather than economic development.
E. FDI has both benefits and costs.
Answer: E. FDI has both benefits and costs
A. rise of communism in Eastern Europe
B. generally steady economic growth of those countries that embraced the radical position
C. growing belief in many countries that FDI leads to loss of jobs
D. strong economic performance of those developing countries that embraced capitalism
E. collapse of capitalism in the newly independent nations of Asia
Answer: D. strong economic performance of those developing countries that embraced capitalism
A. conservative
B. pragmatic nationalism
C. free market
D. radical
E. Keynesian economic
Answer: C. free market
A. The MNE is an instrument for dispersing the production of goods and services to the most efficient locations around the globe.
B. MNEs extract profits from the host country and take them to their home country and help all countries realize economies of scale.
C. When an MNE produces products, profits from the investment go abroad, and hence the MNE helps foreign exchange to rotate.
D. A foreign-owned manufacturing plant may import many components from its home country, thus improving the balance of payments of the host country.
E. MNEs increase the efficiency of the world economy by increasing the flow of capital in the world market.
Answer: A. The MNE is an instrument for dispersing the production of goods and services to the most efficent locations around the globe
A. According to the free market view, MNEs decrease the overall efficiency of the world economy.
B. The free market view argues that FDI is a benefit to both the source country and the host country.
C. According to the free market view, MNEs can never be instruments of economic development, only of economic domination.
D. According to the free market view, FDI is beneficial to the host country of an MNE but it is harmful for the home country of the MNE.
E. The free market view traces its roots to Marxist political and economic theory.
Answer: B. The free market view argues that FDI is a benefit to both the source country and the host country
A. how firms try to match each other's moves in different markets to try to hold each other in check.
B. the interdependence between firms in an oligopoly that leads to imitative behavior among the rivals.
C. why a greenfield investment in a new facility is better than an acquisition of or a merger with an existing local firm.
D. the problems associated with doing business in a different culture where the rules of the game may be very different.
E. how location factors affect the direction of FDI.
Answer: E. how location factors affect the direction of FDI
A. radical
B. free market
C. pragmatic nationalism
D. comparative advantage
E. pluralist
Answer: A. radical
A. a multinational enterprise (MNE) is an instrument of economic development rather than economic domination.
B. MNEs are more beneficial to host countries than to their home countries.
C. important jobs in the foreign subsidiaries of MNEs go to host-country nationals rather than to citizens of the home country.
D. FDI by the MNEs of advanced capitalist nations keeps the less developed countries of the world relatively backward.
E. MNEs exploit their home countries for the exclusive benefit of their host countries.
Answer: D. FDI by the MNEs of advanced capitalist nations keeps the less developed countries of the world relatively backward
A. immediately nationalized.
B. made to pay higher taxes.
C. converted into publicly traded companies.
D. banned from obtaining finance from the financial institutions in the host country.
E. immediately privatized.
Answer: A. immediately nationalized
A. eclectic paradigm
B. protectionism argument
C. product life-cycle theory
D. new trade theory
E. infant industry argument
Answer: A. eclectic paradigm
A. acquiring the home markets of foreign firms that threaten a firm's domestic market.
B. gaining a commanding position in one market and using them to subsidize competitive attacks in other markets.
C. preferring exporting over licensing in order to retain control over know-how, manufacturing, marketing, and strategy.
D. utilizing resource assets that are tied to a particular foreign location and valuable enough to be combined with the firm's own unique assets.
E. franchising and licensing.
Answer: D. utilizing resource assets that are tied to a particular foreign location and valuable enough to be combined with the firm's own unique assets
A. Dunning rejects the argument of internalization theory that it is difficult for a firm to license its own unique capabilities and know-how.
B. Dunning suggests that to exploit foreign resources, such as oil and other minerals, a firm must undertake licensing rather than FDI.
C. Dunning argues that it makes sense for a firm to locate production facilities in those countries where the cost and skills of local labor is most suited to its particular production processes, since labor is not internationally mobile.
D. Dunning's theory and its extensions help explain the imitative FDI behavior by firms in oligopolistic industries.
E. Dunning argues that combining location-specific assets or resource endowments with the firm's own unique capabilities always requires licensing.
Answer: C. Dunning argues that it makes sense for a firm to locate production facilities in those countries where the cost and skills of local labor is most suited to its particular production processes, since labor is not internationally mobile
A. a multipoint competition.
B. an oligopoly.
C. a first mover.
D. externalities.
E. free riders.
Answer: D. externalities
A. monopoly
B. monopsony
C. cartel
D. multipoint competition
E. oligopsony
Answer: D. multipoint competition
A. a monopoly.
B. engaged in cooperation.
C. a cartel.
D. engaged in multipoint competition.
E. an oligopsony.
Answer: D. engaged in multipoint competition
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.
Answer: A. a rival does not dominate one market and use the profits from there to drive competitive attacks elsewhere
A. internalization theory does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.
B. imitative theory addresses the issue of whether FDI is more efficient than exporting or licensing for expanding abroad.
C. most economists favor imitative theory as an explanation for FDI.
D. no important aspect of FDI is explained by imitative theory.
E. internalization theory addresses the issue of efficiency of FDI over exporting or licensing.
Answer: E. internalization theory addresses the issue of efficency of FDI over exporting or licensing
A. lack of interaction among the major players.
B. presence of a domestic market which is open for foreign firms.
C. desire of all the major players to avoid the phenomenon of diminishing returns.
D. interdependence of the major players.
E. lack of imitative behavior among the major players.
Answer: D. interdependence of the major players
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.
Answer: B. also respong with similar price cuts
A. trade wars.
B. a decrease in the supply.
C. imitative behavior.
D. higher demand.
E. increased domestic consumption.
Answer: C. imitative behavior
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.
Answer: A. QFresh and Fast Fizz will reduce the prices of their respective drinks
A. it may result in a firm's technological know-how being restricted to a limited knowledge base and stifles any future development.
B. 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.
C. when a firm allows another enterprise to produce its products under license, the licensee bears the costs or risks.
D. its use is restricted by the government through the imposition of tariffs and quotas.
E. it is less cost-effective than FDI.
Answer: B. it does not give a firm the tight control over manufacturing, marketing and strategy in a foregin country that may be required to maximize its profitablity
A. the firm wants its technological know-how to be widely disseminated.
B. the firm wishes to maintain control over its operations and business strategy.
C. the transportation costs are low.
D. there are no trade barriers.
E. the firm wants to customize its products as per the tastes and preferences of foreign consumers.
Answer: B. the firm wishes to maintain control over its operations and business strategy
A. explain the constraints of exporting and licensing.
B. explain the challenges faced by a firm during the establishment of a new operation in a foreign country.
C. explain the patterns of FDI flows based on the idea that FDI flows are a reflection of strategic rivalry between firms in the global marketplace.
D. review the theories that have been used to explain foreign direct investment.
E. explain how greenfield investments are better than FDI.
Answer: C. explain the patterns of FDI flows based on the idea that FDI flows are a reflection of strategic rivalry between firms in the global marketplace
A. perfect competition
B. onopoly
C. oligopoly
D. dual monopoly
E. monopsony
Answer: C. oligopoly
A. comparative advantage theory.
B. distribution theory.
C. new trade approach.
D. market imperfections approach.
E. licensing theory.
Answer: D. market imperfections approach
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.
Answer: C. the preference for FDI over licensing by firms as strategy to enter foreign markets
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.
Answer: C. express a preference for FDI over licensing as a strategy to enter foreign markets
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.
Answer: B. Licensing may result in a firm's giving away valuable technological know-how to a potential foreign competitor
A. unattractiveness in foreign markets.
B. high value-to-weight ratio.
C. high cost of manufacture.
D. low weight-to-value ratio.
E. low value-to-weight ratio.
Answer: E. low value-to-weight ratio
A. exporting.
B. FDI.
C. licensing.
D. franchising.
E. outsourcing.
Answer: B. FDI
A. FDI.
B. importing.
C. franchising.
D. outsourcing.
E. licensing.
Answer: B. Importing