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| 1.
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A Greenfield investment involves the establishment of new operations in a foreign country. |
| | A) | True |
| | B) | False |
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| 2.
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The relationship between Kodak and Fuji Photo Film Co is an example of multipoint competition. |
| | A) | True |
| | B) | False |
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| 3.
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Vernon's theory is a powerful one because it explains why a firm undertakes FDI rather than continuing to export from its home base or entering into a licensing arrangement. |
| | A) | True |
| | B) | False |
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| 4.
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If Kia Auto were to enter the Canadian market by acquiring a large number of dealers rather than distributing its cars through independent U.S. dealers, Kia's actions would be a form of backward vertical FDI. |
| | A) | True |
| | B) | False |
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| 5.
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In contrast to the market imperfections approach, the product life cycle theory and Knickerbocker's theory of horizontal FDI have proven to be powerful predictors of the factors that influence the relative profitability of FDI, licensing, and exporting. |
| | A) | True |
| | B) | False |
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| 6.
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________ occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country. |
| | A) | portfolio investment |
| | B) | foreign direct investment |
| | C) | international investment |
| | D) | transnational investment |
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| 7.
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When a firm undertakes FDI it becomes |
| | A) | an MNE |
| | B) | a transnational corporation |
| | C) | an international company |
| | D) | more diverse |
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| 8.
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FDI can take which of the following forms? |
| | A) | stock options and mergers |
| | B) | acquisition and stock options |
| | C) | Greenfield investment and acquisitions |
| | D) | Greenfield investments and stock options |
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| 9.
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The flow of FDI refers to |
| | A) | the amount of FDI undertaken over a given time period |
| | B) | the total accumulated value of foreign-owned assets at a given time |
| | C) | the flow of FDI out of a country |
| | D) | the flow of FDI into a country |
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| 10.
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Outflows of FDI refers to |
| | A) | the amount of FDI undertaken over a given time period |
| | B) | the total accumulated value of foreign-owned assets at a given time |
| | C) | the flow of FDI out of a country |
| | D) | the flow of FDI into a country |
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| 11.
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Over the last decade, the largest recipient of FDI is |
| | A) | South Korea |
| | B) | India |
| | C) | China |
| | D) | Mexico |
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| 12.
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______ received the smallest amount of inward FDI in 2004. |
| | A) | Latin America |
| | B) | Africa |
| | C) | Southeast Asia |
| | D) | North America |
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| 13.
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All of the following except _____ have been important source countries for FDI since World War II. |
| | A) | Sweden |
| | B) | Germany |
| | C) | France |
| | D) | the Netherlands |
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| 14.
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If a company wants a quick entry into a foreign market, ______ is appropriate. |
| | A) | mergers and acquisitions |
| | B) | Greenfield investment |
| | C) | portfolio investment |
| | D) | monopoly investment |
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| 15.
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A company producing a product with a low value-to-weight ratio that can be produced in almost any location will probably |
| | A) | choose FDI over exporting |
| | B) | export its product from headquarters |
| | C) | not consider transportation costs when analyzing the relative attractiveness of exporting, licensing, and FDI |
| | D) | choose exporting over FDI |
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| 16.
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When any of the following conditions exist except ______, markets fail as a mechanism for selling know-how and FDI becomes more profitable than licensing. |
| | A) | when the firm has valuable know-how that cannot be adequately protected by a licensing contract |
| | B) | when there are strong patent and copyright enforcement policies in the host and home countries |
| | C) | when the firm needs tight control over a foreign entity to maximize its marketshare and earnings in that country |
| | D) | when a firm's skills and know-how are not amenable to licensing |
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| 17.
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______ argued that the firms that pioneer a product in their home country often undertake FDI to produce a product for consumption in foreign markets. |
| | A) | Knickerbocker |
| | B) | Vernon |
| | C) | Porter |
| | D) | Smith |
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| 18.
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Knowledge spillovers such as those arising from the concentration of intellectual talent in Silicon Valley are referred to as |
| | A) | knowledge pools |
| | B) | knowledge bases |
| | C) | knowledge epicenters |
| | D) | externalities |
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| 19.
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When a firm has the knowledge and ability to extract raw materials in another country and there is no efficient producer in that country that can supply raw materials to the firm ______ will occur. |
| | A) | forward vertical FDI |
| | B) | backward vertical FDI |
| | C) | downstream vertical FDI |
| | D) | horizontal vertical FDI |
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| 20.
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______ is more common in industries that are fragmented, low-tech ones where globally dispersed manufacturing is not an option. |
| | A) | exporting |
| | B) | FDI |
| | C) | licensing |
| | D) | joint ventures |
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| 21.
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_____ is an example of an industry that is well suited to licensing or franchising. |
| | A) | pharmaceuticals |
| | B) | computers |
| | C) | aerospace |
| | D) | fast food |
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| 22.
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The service industry version of licensing is |
| | A) | exporting |
| | B) | mergers |
| | C) | franchising |
| | D) | acquisitions |
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| 23.
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Franchising usually involves ______ commitments than licensing. |
| | A) | much longer |
| | B) | much shorter |
| | C) | similar |
| | D) | a little shorter |
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| 24.
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Which of the following is most useful from a business perspective? |
| | A) | the product life cycle theory |
| | B) | Knickerbocker's theory of horizontal FDI |
| | C) | the market imperfections approach |
| | D) | Vernon's theory of FDI stages |
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