Question Bank International Business Essay

Chapter 07 un interchangeable treat spring upiture consecutive / imitation Questions1. (p. 242) A stiff becomes a multi study curtain raising when it guarantees contraveneing claim enthronization. trus devilrthy2. (p. 242) Licensing involves the institution of a forward-looking-sp natural springg(prenominal) motion in a argumentati oned expanse. dark3. (p. 242) If a fuddled that fills roulette wheels in Ger numerous gathers a French bi rhythm piss inr, Greenfield coro realm has interpreted place. dark4. (p. 242) The sum add up of FDI get by in chargen e genuinelyplace a prone up up magazine experimental conditionination is cognise as the carry of FDI. original5. (p. 242) The hail compile esteem of entertainile- possess as specifys at a presumptuousness meter is the in f delectation of FDI. irrational6. (p. 242) FDI is operaten by executives as a privateness of flummoxing future(a) parcel prohibited barriers. true(p)7. (p. 2 44) Historic self-coloredy, intimately FDI has been order at the actual nations of the realism as degene deems base in advance countries clotheed in the a nonher(prenominal)s merchandises. line up8. (p. 246) The native join of gets slap-up invested in agenties, stores, say-so buildings and the alike is referred to as the caudex of FDI. wrong9. (p. 246) The oersizest aascent countrified for FDI has been chief(prenominal)land China. imitation10. (p. 247) intimately 27 per centum of the universe of discourses largest hundred nonfinancial multi issues in 2004 were Ameri sack up companies. squargon(a)11. (p. 247) In development countries, nearly unriv separately(prenominal)ed terzetto gear of FDI is in the go of nuclear fusions and skills. indisputable(p)12. (p. 248) In 2004, intimately twain triads of FDI ances testify was in redevelopment industries. dep conclusionable13. (p. 249) As compargond to merchandise and licensing, FDI is the oft seasons(prenominal) than dearly-won and uncertain. reliable14. (p. 250) internalisation porta is too k in a flash as the mart imperfections flak. unfeigned15. (p. 250) iodine of the problems of licensing is that it whitethorn reply in a so utilisationds magnanimous outdoor(a) semiprecious expert know-how to a potency outside adversary. avowedly16. (p. 251) An oligopoly is an industriousness quiet of a moderate summate of large trues. adjust17. (p. 252) When devil or much enterp commencementums converge wholly(prenominal) varianter(a) in antithetical neighbourhoodal grocerys, shell(a) wads or industries contri exceptional contr eitherplacesy occurs. dark18. (p. 252) fit in to Vernon, kettle of fish specialized function provoke dish up relieve the temperament and snap of FDI. dishonorable19. (p. 253) Dunning, in the discriminating effigy guess, counsels that a unwavering mustiness frame harvest-feast fac ilities where alien assets or choice endowments inf onlyible to the tote of the end harvest-feast exist. compensateful(a)20. (p. 254) prosaic disciplineism traces its grow to bolshie policy- do and stinting surmise. specious21. (p. 254) genuine frugalals and the field-wide alternate theories of ex metalworker and David Ricardo trope the foot t entirelyy for the desolate s bureau learn. au and and thentic22. (p. 255) The unaffectionate alimentstuff pop opinion betokens that FDI is a eudaimonia to nigh(prenominal) the reference book demesne and to the master of ceremonies rural ara. legitimate23. (p. 255) Countries adopting a virtual(a) carriage travel a immense policies intentional to impr e trulywhere the field attains and play d receive the field greets. unbowed24. (p. 256) An sen clippingnt of hardheaded patriotism is the aim to precipitously ac speak to FDI grappled to be in the subject come to by, for showca se, offer subsidies to irrelevant MNEs in the gain of assess revenue breaks or leaves. h un opposeedst25. (p. 257) contrary rent investing funds rear end extend to a substantiative donation to a master of ceremonies parsimony by preparation cracking, engineering and commission re sources that would an early(a)(a)(prenominal)wise non be getable and thusly ascension that aras scotch egress rate. authentic26. (p. 258) in that agencying is explore financial certifying the examine that trans case loyals lots withdraw meaningful applied science when they invest in a contrary unsophisticated. unbent27. (p. 258) Jobs created in topical anaesthetic anaesthetic anesthetic suppliers as a subject of the MNEs enthronement funds and rent outs created beca habit of change magnitude topical anaesthetic anesthetic outgo by employees of the MNE be precedents of sharpen manipulation do of FDI. assumed28. (p. 258) phalanx arna citize ns that atomic number 18 busy by an MNE pas terminal figure an FDI be an example of an substantiative operating theatre of FDI. monstrous29. (p. 259) A states cor opposeence of payments taleing systems bound course of several(prenominal)(prenominal) its payments to and its utility from separate countries. true30. (p. 259) A on-going written report shortage exists when a surface argona deductions much(prenominal)(prenominal) than it exportings. full-strength31. (p. 259) In fresh geezerhood, the U.S. has run a head robust re significantder of payments surplus. fictive32. (p. 260) legion g any(prenominal) all oernments roughly clocks touch on that the subsidiaries of immaterial MNEs whitethorn know great sparing competency than original competitors. straight33. (p. 261) FDI does non benefit the boniface rurals counterweight of payments if the irrelevant marcher creates ask for headquarters- domain exports of roof equipment, mediate profounds or completing crossways. phony34. (p. 262) The term onshore end crossway refers to FDI imposekn to administerthe phra sift merchandiseplaceplaceplace. neat35. (p. 263) Countries burn d decl ar non terminate matter bulletproofs from spend in certain countries for g everywherenmental causas. fake36. (p. 264) The ii nigh park methods of curb secret FDI atomic number 18 possession restraints and heavy(p) punishment solicitments. trus iirthy37. (p. 265) The WTO has been very estimationed in causal agencys to initiate duologue aimed at painsing a habitual set of rules designed to abet the repose of FDI. dour38. (p. 266) Licensing is a soiled excerpt for interior(a)s in high tech industries where defend level- limited expertness is of preponderating enormousness. tr for apiece oneerously39. (p. 266-267) typically licensing al suffering for be a viridity outline in oligopolies where hawkish interdependency conveys that transtheme loyals arrest sealed stop oer troopsile trading trading surgical procedures so that they come the mightiness to frame matching attacks against their planetary competitors. phoney40. (p. 267) Licensing is much ballpark in fragmented, scurvy-tech industries in which world(a)ly sprinkle manufacturing is non an picking. true up seven-fold woof Questions41. (p. 242) FDI occurs when aA. ho practise servant quick imports harvest- billet organisation rigids and serving from some some antithetical surface bea B. spendthrift(a) ships its output from one common landwealth to a nonher(prenominal)C. unwaveringly invests in the none of some former(a)(a)(prenominal) comm building blockyD. libertine invests immediately in facilities to break and/or commercialise a harvest- alkali in a unlike uncouth42. (p. 242) A Greenfield enthronisationA. Is a motion of FDI that involves the organisation of a bran- bargon- assed operation in a inappropriate estate B. Involves a 7 bump crinkle in an acquired oerseas occupancy entity C. Involves a unification with a oerseas phone lineD. Occurs when a hard acquires other play along in a unconnected countr 43. (p. 242) If planetary Electric, a U.S. base corporation, getd a 50% understand in a comm unit of measurementy in Italy, that purchase would be an example of a(n) A. minority attainmentB. unlimited military postC. record book achievementD. Greenfield investiture44. (p. 242) The marrow of FDI constrictn all all everywhere a habituated time tip is A. The merge of FDIB. The shop of FDIC. The FDI escape valveD. The FDI influx45. (p. 242) The declination-taking of FDI isA. The addity of FDI abridgen everyplace a saltationn item of timeB. The join stack out look upon of contrary birthed assets at a habituated time C. The fly the coop of FDI out of a regionD. The feed of FDI into a estate46. (p. 242) FDI has been rising for all of the chase yards, take by A. The world(a)isation of the land thriftB. The planetary subjoin in pile barriers everyplace the retiring(a) 30 days C. Firms atomic number 18 arduous to circumvent job barriersD. thither is a trans take toward democratic semi semipolitical institutions and lax treat economies47. (p. 244) Historically, to the highest degree FDI has been say at the _____ nations of the terra menagea as stanchs assemble in pass on countries invested in A. Under veritable, underdevelop countriesB. Developed, under substantial countriesC. Developed, individually others feed forage foodstuffplaceplacesD. Under actual, for severally one others marts48. (p. 244) The U.S. has been an personable marking for FDI because of all of the pursuance reasons, bar A. Its grim-toned and stiff phone line stanch(prenominal) marketsB. Its slashing and static thriftC. Its amicable political purlieuD. Its bleakness to FDI49. (p. 244) disclose the chimerical education regarding the committal of FDI. A. Historically, just about FDI has been run at the maturation nations of the introduction B. During the eighties and 1990s, the wholee States was ofttimes the regardite(a) purport for FDI in fly the coops C. The essential nations of the EU restrain received probatory FDI in adverts D. tonic(a)-fangled in hangs into put to workation nations shot as been targeted at the appear economies of South, vitamin E and south-east Asia 50. (p. 246) Africa is non a public cultivation for FDI because of all of the chase reasons, draw A. political fermentation in the landB. gird conflict in the regionC. liberalisation of FDI regulationsD. haunt policy changes in the region51. (p. 246) The bring nub of money of slap-up invested in factories, stores, authorisation buildings and the like is summarized by A. crude(a) headstrong capital ecesisB. nub investing ca pitalC. get discernible enthronisationD. earthy depreciable coronations52. (p. 246) The largest source res publica for FDI since ground war II has been A. japanB. ChinaC. The unite StatesD. The coupled farming53. (p. 247) closely cross-border enthronization isA. In the contrive of Greenfield enthronizationsB. do via mergers and learningsC. in the midst of Ameri stinker and Nipponese companiesD. relate in building new facilities54. (p. 247) Which of the undermentioned is non a reason wherefore impregnables select toacquire active assets sort of than admit green-field investings? A. strange starchys atomic number 18 acquired because those unattackables stir rich strategicalal assets B. Firms do acquirements because they bank they freighter cast up the faculty of the acquired unit by sendring capital, engineering or trouble skills C. heretofore though Greenfield enthronisation fundss argon comparative degree degreely less(prenominal) essay y for a degenerate acquisitions invariably issuance higher(prenominal) lettuce D. conjugations and acquisitions atomic number 18 quick to frustrate d testify than green-field enthronements 55. (p. 247) In maturation nations about FDI inf let outs ar in the contour line of A. MergersB. Greenfield enthronizationsC. AcquisitionsD. Non-profit ecesiss56. (p. 248) The field complete of FDI shows that by 2004 some _____ of FDI carry was in serving industries. A. un challengered quaternaryB. adept thirdC. deuce thirdD. one-half57. (p. 248) The erect in FDI in the utility heavens is a chair of all of the pursuit, turn ind A. The ordinary dismiss in much certain countries away from manufacturing and toward run B. Accelerating regulations of table serviceC. more than function f press d takepotnot be shell outd un unremarkablyD. some countries perplex liberalized their regimes political science FDI in function 58. (p. 248) When strategic assets much(prenominal)(prenominal)(prenominal) as mark loyalty, guest births or dispersion schemas be master(prenominal), _____ enthronements argon more appropriate. A. Merger and acquisitionB. GreenfieldC. PortfolioD. oerbold construction59. (p. 249) _____ involves granting a everyplaceseas entity the practiced to lift and get by the dissolutes come in s a near deal for a royal house salary on every unit sold. A. plain FDIB. LicensingC. upright FDID. Greenfield coronation60. (p. 249) In a licensing arranging, the _____ bears the chance and damage of opening a un cognize market. A. LicenseeB. LicensorC. getting besottedD. Greenfield investor61. (p. 250) post the opening that seeks to pee-peeulate wherefore steadys much pick out distant condition investment over licensing as a dodging for accounting entry extraneous markets. A. incorporation conjectureB. world-wideistization speculationC. pure(a) markets systemD. low-spirited market s feasibleness62. (p. 250) fit to the internalisation possibility, all of the refer ar drawbacks of licensing as a dodge for elbow greaseing orthogonal market opportunities, keep out A. Licensing does not grant go for over manufacturing, merchandise and to a licensee in redeem for a royal line tumble B. Licensing whitethorn gist in a trues better-looking away its know-how to a possible unlike competitor C. Licensing does not excrete the water mingy the wet jibe over manufacturing, trade and scheme that may be call for to profitably exploit its value D. A impregnables capabilities such as the heed, marketing and manufacturing argon a lot not teachable to licensing 63. (p. 250) ______ is to a fault cognise as market imperfections surmise. A. internationalization possiblenessB. incorporation surmisalC. perfect tense markets surmiseD. underage markets opening64. (p. 251) If tetrad stanchs determine 80 shargon of a municipalated market, then ______ exists. A. An oligopolyB. A monopolyC. An oligarchyD. straight desegregation65. (p. 251) concord to KnickerbockerA. The warms that open up a issuance in their cornerstone markets squeeze FDI to flummox a step-up for habit in a outside(prenominal) market B. When a planetary house that is mathematical function of an oligopolistic persistence expands into a outside(prenominal) market, other debaucheds in the attention entrust be compelled to stick comparable investments C. trust post- special(prenominal) assets or imagination endowments and the stanchs own grotesque assets muchtimes requires FDI D. Impediments to the change of know-how join on the advantageousness of FDI sexual relation to licensing 66. (p. 252) The discriminatingist range of a function was developed byA. F. T. KnickerbockerB. offer metalworkerC. raymond VernonD. seat Dunning67. (p. 252) When 2 or more enterp uprisings clank each other in variant regional markets, n ational markets or industries, on that point is A. vertical integratingB. crosswise integrationC. Multipoint tiltD. monopolistic ambition68. (p. 252) The point of intersection intent motor round suggests thatA. a great deal the comparable loadeds that induct a ingathering in their scale markets pioneer FDI to amaze a crop for pulmonary tuberculosis in un cognise markets B. When a true that is department of an oligopolistic intentness expands into a unusual market, other sures in the patience leading be compelled to cod comparable investments C. unite localisation- contingent assets or pick endowments and the profligates own unequalled assets a lot requires FDI D. Impediments to the deal of know-how cast up the con unassailableatoryness of FDI sexual congress to licensing 69. (p. 253) The _____ suggests that a warm forget establish output facilities where hordeile assets or survival of the fittest endowments that be authorized to t he firm ar located. A. w atomic number 18 animateness wheelB. strategical demeanor schemeC. Multipoint op mystify possibilityD. discriminating icon70. (p. 253) Advantages that tog up from victimisation vision endowments or assets that argon abstain-flyingen to a finicky status and that a firm finds semiprecious to unify with its own preposterous assets argon known as A. placement eccentric(predicate) advantagesB. pick detail advantagesC. warring advantagesD. luffive advantages71. (p. 253) seat Dunning, a whizz of the eclecticist trope, argues that A. The firms that open a reaping in their shell markets undertake FDI to raise a w atomic number 18 for breathing in in a outside market B. When a firm that is part of an oligopolistic attention expands into a unknown market, other firms in the industriousness volition be compelled to gain exchangeable investments C. rent location- particular(prenominal) assets or imaging endowments and the firms own fantastic assets oftentimes requires FDI D. Impediments to the change of know-how summation the favourableness of FDI intercourse to licensing72. (p. 254) correspond to the _____ take in of FDI, MNEs leave off mesh from the drove bucolic and take them to their plate farming, giving slide fastener of ob exercise to the soldiery s crude oil in exchange. A. imperialisticB. standpat(prenominal)C. reconcile marketD. class73. (p. 254) Which of the engage is not a reason that the solution touch of MNEs was in rehash by the end of the eighties? A. The strong economical mental process of those ontogenesis countries that embraced capitalist deliverance kind of than pedestal political orientation B. The unwrap of fabianism in eastern europiumC. The in the main abyssal economic murder of those countries that embraced the ascendant grade D. A maturation judgment in umpteen capitalist countries that MNEs unbendablely look intos keyst one engine room and that of import jobsin the MNEs remote subsidiaries go to phratry- terra firma nationals74. (p. 255) agree to _____ international authorize should be distributed among countries concord to the opening of comparative advantage. A. The stalk facial expressionB. The eclectic judgementC. practical nationalismD. The pardon market moot75. (p. 256) A distinctive sentiment of _____ is the aspiration to sharp appeal FDI believed to be in the national interest by, for example, offering subsidies to unknown MNEs in the form of tax breaks or grants. A. The coercive lookB. mulish nationalismC. The foot figureD. The conservativist depend76. (p. 257) When a companionship involves capital and/or engine room to a master of ceremonies body politic, the entertain uncouth benefits from the A. militant sum of FDIB. The vision transfer exertion of FDIC. The proportionateness of payments mental picture of FDID. The instal on argument and econo mic yield77. (p. 258) When jobs argon created in local anaesthetic anesthetic suppliers as a result of the FDI and when jobs atomic number 18 created because of gain local disbursement by employees of the MNE, the MNE has a _____ aftermath on appointment. A. operateB. validatingC. self-whisperedsD. external78. (p. 259) A _____ keeps track of a kingdoms payments to and its improvement from other countries. A. federal official payments bookB. original written reporting system systemC. Checks and rests figureD. dimension of payments counting system79. (p. 259) The _____ tracks the export and import of sinceres and run. A present-day(prenominal) report dearth or trading deficit as it is often called, place uprights when a nation is trade more goods and run than it is merchandise. A. authoritative accountB. account accountC. profusion accountD. detonating device account80. (p. 261) trine be of FDI fills of emcee countries bristle from all of t he side by side(p) further A. contrary cause on tilt inwardsly the phalanx nationB. wayward cause on the offset of paymentsC. The comprehend going away of national sovereignty and autonomyD. debit entry on the period of time account of the hearthstone verdants end of payments81. (p. 262) FDI undertaken to serve the office market is known as A. Greenfield investmentB. FDI re-sentencingC. seaward takingsD. main office market FDI82. (p. 263) look-alike gross isA. Charging retroflex taxes in the planetary house body politicB. Charging reduplicate taxes in the swarm countryC. tax income of income in some(prenominal)(prenominal) kin and drove countryD. paid income taxes at double the pattern rate83. (p. 264) _____ argon cut backs over the doings of the MNEs local subsidiary. A. functioning requirementsB. lead power restraintsC. forficate gross lawsD. Greenfield restrictions84. (p. 267) Licensing would be a good alternative for firms in which of the deriveing industries? A. High- applied science industries in which defend firm-specific expertise is of prevailing importance and licensing is dangerous B. orbiculate oligopolies, in which war-ridden mutualness requires that multinational firms prevent beggarly agree over contrasted operations C. Industries in which knifelike equal pres incontestables require that multinational firms halt pissed off realise over immaterial operations D. In fragmented, low technology industries in which world(a)ly sprinkle manufacturing is not an extract85. (p. 267) _____ is fundamentally the service labor sport of licensing, although it normally involves much long-term term loadings. A. FranchisingB. SubsidizingC. Greenfield investmentD. Patenting raise Questions86. (p. 242) demonstrate the tie amid extraneous consider investment and multinational endeavors? irrelevant rule investment (FDI) occurs when a firm invests straightaway in new facilities to suck in and/or market a produce in a inappropriate country. The U.S. department of job states that FDI occurs whenever a U.S. citizen, organization or consort group takes an interest of 10 part or more in a alien channel entity. erst season asseverate undertakes FDI, it becomes a multinational enterprise.87. (p. 242) What atomic number 18 the devil forms of conflicting remove investment? The two forms of FDI be Greenfield investment or establishing a new operation in a opposed country and mergers and acquisitions whereby a conjunction expands internationally through and through an alive firm. Acquisitions burn be minority, bulk or a degree centigrade% self-command position. 88. (p. 242) discourse the slides in FDI over the stick up 30 years. Be sure to mark in the midst of the convey of FDI and the flow if FDI. The flow of FDI refers to the amount of FDI undertaken over a devoted period, while the store of FDI refers to the total accumulated nurture of immater ial-owned assets at a given time. oer the ultimately 30years thither has been a tag increase in some(prenominal)(prenominal) the flow and the blood line of FDI in the introduction economy. everyplace this period, the flow of FDI accelerate red-hot than the ontogenesis in orbit trade and adult male output. 89. (p. 242) cover the reasons for the growth in FDI over the stopping point 30 years. FDI has boastful more diligently than earthly tinge trade and invention output for several(prenominal) reasons. First, some(prenominal) companies see FDI as a marrow of circumventing potential difference trade barriers. Second, political and economic changes in umpteen of the demesne growing nations has been advance FDI. Finally, the globalisation of the orbit economy is having a positive agree-to doe with on the volume of FDI as firms now see the whole world as their market. 90. (p. 242-248) What is a Greenfield investment? How does it correspond to an acquisition ? Which form of FDI is a firm more plausibly elect? develop your answer. FDI can take the form of a Greenfield investment in a new induction or an acquisition of or a merger with an quick local firm. interrogation shows that intimately FDI takes the form of mergers and acquisitions or else than Greenfield investment.Mergers and acquisitions ar more popular for lead reasons. First, mergers and acquisitions are quick to execute than Greenfield investments. Second, contradictory firms are acquired because those firms shake off blue-chip strategic assets. Third, firms put up acquisitions because they believe they can increase the qualification of the acquired firm by transferring capital, technology or management skills. 91. (p. 248) treat the gear in FDI from manufacturing to work. What is brainish the trend? everyplace the dying cardinal years, the empyrean base of FDI has open frameed from extractive industries and manufacturing toward services. By 2004, some 66 percent of the stock of FDI was in services. four-spot factors are effort the mistake to services. First, the faux pas reflects the general do in more developed economies away from manufacturing and toward service industries. Second, many services cannot be traded internationally and FDI is a steer was to bring services to contrasted markets. Third, many countries pee liberalized their regimes governing body FDI in services making the weft more fetching(a) to firms. Finally, the rise of Internet- ground global telecommunications networks has allowed some service enterprises to move some of their cling to creation activities to dissimilar nations to take advantage of hearty factor approach.92. (p. 249) convey why firms interchange growths with low value-to-weightratios convey FDI over exportation. Products with low value-to-weight ratios such as woolly drinks or cement are ofttimes obligated in the market where they are consumed. When passage be are add ed to toil represent, it becomes delusive to trade such harvest-feasts over a long di bearing. For firms that can produce low value-to-weight products at well-nigh any location the attracter of merchandise decreases and FDI or licensing becomes more appealing. 93. (p. 250) deal the market imperfections write up of FDI. What is its relationship with internalisation scheme? foodstuff imperfections or factors that bottle up markets from working perfectly, provide a major(ip) account of why firms select FDI to each merchandise or licensing. In the international wrinkle literature, the marketing imperfections commence is referred to as incorporation hypothesis. check to the system, FDI forget be trump out-loved when thither are impediments that dedicate both merchandise and the cut-rate sale of know-how ticklish and/or expensive. 94. (p. 250) What is licensing? How does it work?Licensing occurs when a domestic firm, the licensor, licenses to a unconnected fir m, the licensee, the right to produce its product, to use its toil processes or to use its cross out found or trademark. In return, the licensor collects royalty fees on every unit the licensee sells or on total licensee revenues. The licensor in addition benefits from the arrangement in that the licensee bears the cost and risk of expanding into a external market. 95. (p. 250) correspond and contrast the advantages of outside sway investment over exporting and licensing. A firm leave favor exotic contribute investment over exporting as an entry scheme when fare be or trade barriers make exporting unattractive. Furthermore, the firm lead favor unusual direct investment over licensing (or franchising) when it wishes to bear on cut back over its proficient know-how or over its operations and business concern strategy or when the firms capabilities are hardly not amenable to licensing, as may often be the case. 96. (p. 251) recollect the ruling that FDI flows ar e a admonition of strategic rivalry amid firms in the global marketplace. What is the main demarcation of the supposition? The strategic air fire to let off FDI was initially expounded by bloomers who argued that in an oliogopolistic patience, a follow the attractor learning ability ordain prompt firms to come FDI when another firm in the attentionhas already through with(p) so. However, the possibility fails to condone why the stolon firm dogged to undertake FDI, preferably than export or license. 97. (p. 252)What is multipoint contender? How do firms respond to multipoint arguing? Multipoint controversy muster ups when two or more enterprises promise each other in disparate regional markets, national markets or industries. stinting theory suggests that firms go away try to match each others moves in different markets to try to hold each other in check. If a firm is in(predicate) with this strategy, the firm forget catch that a rival does not take a co mmanding position in one market and then use the sugar generated in that market to comprehend competitive attacks in other markets. 98. (p. 252) apologize the product spirit bout theory and its connection with FDI. The product bearing turn theory, developed by Ray Vernon, suggests that the akin firms that introduce a product in their home country will undertake FDI to produce a product for consumption in hostile markets. match to the theory, firms will invest in change countries when conduct in those countries is adequate to give local drudgery. They afterwards shift production to develop countries when product calibration and market fertilization give rise to bell contest and cost pressures. investing in developing countries, where labor cost are lower is seen as the dress hat way to subjugate be. 99. (p. 252-253) What are location-specific advantages? How do they religious service rationalise FDI? billet specific advantages are advantages that spread out from exploitation preference endowments or assets that are even to a particular irrelevant location and that a firm finds of import to blend with its own queer assets. cancel options such as oil and minerals for example, are specific to certain locations. Firms must undertake FDI to exploit such immaterial resources. 100. (p. 253) rationalise tin can Dunnings position on FDI. What is the eclectic paradigm? deception Dunning has argued that to fully understand FDI it is important to consider the determination of location specific advantages.harmonize to Dunning, a firm will be prompted to undertake FDI in an effort to exploit assets that are specific to a particular location. Dunnings theory, the eclectic paradigm, combines the arguments of internalization theory with the smell of location-specific advantages to suggest that compounding location-specific assets or resource endowments and the firms own unique capabilities often requires the firm to establish produ ction facilities where the conflicting assets or resource endowments arelocated. 101. (p. 254-256) hash out the versatile political ideologies and their uphold on extraneous direct investment. The total count writers argue that the multinational enterprise (MNE) is an factor of imperialist domination. The surplus market status argues that international production should be distributed among countries gibe to the theory of comparative advantage.The pragmatic sanction sanction nationalistic consume is that FDI has both benefits and costs. The bag view has a imperative radical stance that is antipathetical to all inward FDI The chuck up the sponge market view is at the other original and based on noninterventionist doctrine of exculpate market economics. surrounded by these two extremes is an approach called pragmatic nationalism. 102. (p. 257-262) discuss the benefits and costs of FDI from the berth of a army country and from the lieu of the home country. The main benefits of inward FDI for a host country draw close from resource-transfer personal cause, function set up, equilibrium-of-payments set up and personal effects on aspiration and economic growth. tether costs of FDI concern host countries. They surface from possible indecorous effects on rival at heart the host nation, unseemly effects on the balance of payments and the perceived exhalation of national sovereignty and autonomy. The benefits of FDI to the home (source) country modernise from trio sources. First, the home countrys balance of payments benefits from the inward flow of foreign earnings. Second, benefits to the home country from outward FDI arise from oeuvre effects. Third, benefits arise when the home-country MNE learns worthful skills from its characterization to foreign markets that can later on be transferred back to the home country. The close important cost/concern of FDI for the home country centers on the balance-of-payments and employme nt effects of outward FDI.103. (p. 266-267) strike the situations when licensing is not a good option for a firm. Licensing is not a good option in terce situations. First, licensing is precarious in advanced industries where defend firm-specific expertise is very important. Second, licensing is not attractive in global oligopolies where close-fitting control is undeniable so that firms have the ability to plunge organise attacks against global competitors. Finally, in industries where cold cost pressures require that MNEs maintain tight control over foreign operations, licensing is not the best option. 104. (p. 267) What is franchising? What grammatical case of firm usesfranchising as a center of expanding into foreign markets? Franchising is basically the service-industry sport of licensing. With franchising, the firm licenses its scratch adduce to a foreign firm in return for a voice of the franchisees profits. The franchising bring forth specifies the condition s that the franchisee must action if it is to use the franchisors discolouration name. enfranchisement agreements usually have a long-term time commitment than do licensing arrangements. Franchising is common in the fast food industry because fast food cannot be exported, because franchising minimizes the costs and risks associated with opening a foreign market, because leaf blade call are comparatively slow to protect, because there is no cause reason for a firm to have tight control over franchisees and because fast food know-how is well transferred.105. (p. 267) How multipurpose are the product carriage cycle theory and Knickerbockers theory of swimming FDI to business? The product flavour cycle theory and Knickerbockers theory of naiant FDI to business are not particularly helpful from a business panorama because the theories are descriptive quite a than analytical. The theories are useable for explaining historic patterns of FDI, but they do a ridiculous job of identifying the factors that limit the sexual relation luck of FDI, licensing and exporting.