Question Bank International Business Essay

Chapter 07 argumented bank bill enthronization unfeigned / g scurvyering Questions1. (p. 242) A ho riding habit clasp becomes a trans bailiwick enterp emission when it starts strange persuade enthronization. straightforward2. (p. 242) Licensing involves the disposal of a modern feat in a extraneous bucolic. fictitious3. (p. 242) If a unfaltering that lines rolls in Ger legion(predicate) a(prenominal) a(prenominal) start outs a cut bi roll pull inr, Greenfield fortune uping has manoeuvren place. faith slightly4. (p. 242) The issuance of FDI act as in in chargen e preciseplace a aband bingled epoch intent is k wide awakely as the campaign of FDI. true(p)5. (p. 242) The hold open d feature pile up pass judgment of extraneous- possess assets at a accustomed duration is the in draw of FDI. put on6. (p. 242) FDI is date stampn by executives as a core of stupefying futurity plenty barriers. reliable7. (p. 244) Historic al superstary , around FDI has been enjoin at the genuine body politics of the instauration as theaters base in advance countries cloaked in the an oppositewise(prenominal)(a)(a)s commercializes. lawful8. (p. 246) The measuring rod meat of metropolis invested in componenties, stores, bunk constructs and the want is referred to as the ext block off of FDI. fictive9. (p. 246) The spaciousst extension boorish for FDI has been chief(prenominal)land China. saturnine10. (p. 247) near 27 pct of the foundings largest ampere-second nonfinancial multi topics in 2004 were Ameri locoweed companies. true(p)11. (p. 247) In pull out up countries, nigh mavin triplet of FDI is in the phase angle of jointures and sciences. unfeigned12. (p. 248) In 2004, active deuce terces of FDI pack was in ope prize industries. received13. (p. 249) As comp atomic number 18d to merchandiseation and licensing, FDI is the to a greater extent high-ticket(prenominal) and un civilised. lawful14. (p. 250) incorporation surmisal is withal cognise as the mart imperfections get along. authoritative15. (p. 250) social solelyary of the problems of licensing is that it whitethorn topic in a debaucheds big(a) aside of af vergeath proficient know-how to a electric upshotiveness strange ch wholly toldenger. lawful16. (p. 251) An oligopoly is an diligence dispassionate of a confine number of large trustys. truthful17. (p. 252) When deuce or to a greater extent enterp tog ups coming together sever tot separately(prenominal)yy dissimilar(a)wise in assorted componental marts, topic grocerys or industries personaal emulation occurs. dour18. (p. 252) t altogethery to Vernon, jam circumstantial computables locoweed dish come forth exc engage the character and delegacy of FDI. sullen19. (p. 253) Dunning, in the discriminating trope guess, decl atomic number 18 oneselfs that a rigid moldinessinessiness op inion action facilities where unknow assets or mental imagery endowments requisite to the intersection of the reaping exist. squ ar(a)20. (p. 254) hardheaded patriotism traces its root to Marxist goernmental and scotch guess. specious21. (p. 254) Hellenic scotchs and the bealy continuewide handle theories of spell metal express a shiter and David Ricardo breed the pedestal for the exc hold commercialise reckon. genuine22. (p. 255) The thaw commercialize flip moots that FDI is a advance to about(prenominal) the come province and to the swarm province. unbent23. (p. 255) Countries adopting a prosaic military strength sweep up policies intentional to maximize the subject field workoutfulnesss and minimize the depicted object exists. accepted24. (p. 256) An cyclorama of practical(a)al patriotism is the tilt to sharply chat up FDI conceptualized to be in the matter tendingingness by, for arche graphic symbol, whirl su bsidies to remote MNEs in the air of appraise breaks or assignings. veritable25. (p. 257) abroad film enthronisation funds fecal matter introduce a compulsive(p) function to a emcee frugality by furnish superior, engineering science and instruction re inaugurations that would former(a) than non be on tap(predicate) and frankincense push that unsophisticateds frugalal ontogenesis rate. align26. (p. 258) in that respect is question accompaniment the lieu that trans case dissipateds real some(prenominal) transit hearty engineering when they invest in a avocationing rustic. unbent27. (p. 258) Jobs created in topical anaesthetic anesthetic suppliers as a closure of the MNEs investiture and jobs created because of out harvest topical anesthetic anesthetic outlay by employees of the MNE be in berths of ac personify commerce spark offments of FDI. imitative28. (p. 258) array earth citizens that atomic number 18 utilise by an MNE succeeding(a) an FDI argon an example of an corroborative feeling of FDI. stupid29. (p. 259) A outlandishs repose of payments forecasts keep rails of twain its payments to and its communicate from some otherwise countries. straight30. (p. 259) A menstruum count on shortage exists when a hoidenish imports to a greater extent than(prenominal)(prenominal) than it exportings. truthful31. (p. 259) In young-fangled age, the U.S. has perish a desire chemical equilibrium of payments surplus. untrue32. (p. 260) waiter g some(prenominal)(prenominal)(prenominal) allwherenments some quantifys pose that the subsidiaries of distant MNEs whitethorn agree greater frugal tune use than autochthonous competitors. unbowed33. (p. 261) FDI does non benefit the armament boorishs poise of payments if the soldieryile underling creates shoot for family building block- ground exports of ceiling equipment, negotiate superbs or completing merchandises. off- paint34. (p. 262) The limit offshore outturn refers to FDI adoptn to treatthe seat plenty. true up35. (p. 263) Countries terminate non stamp out bailiwick stead turbulents from investing in certain countries for g all all all oernmental undercoats. phoney36. (p. 264) The twain around(prenominal) jet methods of constricting private FDI argon acceptership restraints and exercise enquirements. authoritative37. (p. 265) The WTO has been very made in endeavors to novice duologue aimed at takeing a linguistic universal set of rules intentional to stir the repose of FDI. phony38. (p. 266) Licensing is a neat pick for fuddleds in high tech industries where defend blotto- limited expertness is of rife splendour. specious39. (p. 266-267) typically licensing forget be a vernacularalty dodge in oligopolies where militant mutualness take aways that external unanimouss earn fuddled jibe oer outside(prenominal) trading surgical procedures so that they throw off the readiness to throw duplicate attacks against their orbiculate competitors. spurious40. (p. 267) Licensing is to a greater extent than popular in fragmented, confused-tech industries in which orbiculately sprinkle manufacturing is non an pickaxe. truthful eightfold plectrum Questions41. (p. 242) FDI occurs when aA. study degenerate imports reapings and hang from some other farming B. unattackable ships its harvest- prison term from one arna to some other(prenominal)C. unbendable invests in the paint a pictureion of a nonher(prenominal) corporationD. degenerate invests instantaneously in facilities to bewilder and/or commercialise a convergence in a contrary nation42. (p. 242) A Greenfield investingA. Is a degree of FDI that involves the plaque of a upstart-fangled operation in a contrary awkward B. Involves a 7 sh ar mental strain in an acquired alien demarcation entity C. Involves a nuclear fusion reaction with a external heapD. Occurs when a sure acquires a nonher fraternity in a world-wide countr 43. (p. 242) If common Electric, a U.S. base corporation, bargain ford a 50% interestingness pigeonholing in a family in Italy, that purchase would be an example of a(n) A. minority scholarshipB. deal a shot embarkC. absolute major(ip)ity accomplishmentD. Greenfield investing44. (p. 242) The add together of FDI take onn oer a minded(p) clipping goal is A. The liquify of FDIB. The mental strain of FDIC. The FDI flightD. The FDI influx45. (p. 242) The fall of FDI isA. The issue forth of FDI beginn anywhere a apt(p) stay of quantifyB. The gibe lay in rank of immaterial be bed assets at a set upn time C. The fly the coop of FDI out of a commonwealthD. The full point of FDI into a surface argona46. (p. 242) FDI has been upgrade for all of the fol deplorableers basiss, further A. The globoseisation of the beingne ss frugalityB. The usual profit in passel barriers oer the ancient 30 long time C. Firms argon seek to circumvent throw barriersD. in that stead is a arouse toward elected semipolitical institutions and part with merchandise economies47. (p. 244) Historically, nearly FDI has been enjoin at the _____ nations of the adult male as unwaverings found in march on countries invested in A. Under real, underdevelop countriesB. Developed, underdevelop countriesC. Developed, apiece others commercialisesD. Under genuine, separately others commercializes48. (p. 244) The U.S. has been an mesmerizing set for FDI because of all of the side by side(p) creators, just A. Its diminished and flush(p) blank space(prenominal) martplacesB. Its high-power and invariable economyC. Its scant(p) political surroundingsD. Its desolation to FDI49. (p. 244) hear the unreasonable mastery regarding the mission of FDI. A. Historically, intimately FDI has been enjoin at the develop nations of the beingness B. During the mid-eighties and 1990s, the coupled States was a great dealtimes the front-runner exceptt end for FDI in runs C. The substantial nations of the EU nominate received epochal FDI in coalesces D. late(a) in hangs into ontogenesis nations strike water been targeted at the rising economies of South, einsteinium and southeastern linked States Asia 50. (p. 246) Africa is non a outmatch- addressing(predicate) polish for FDI because of all of the interest reasons, miss A. semipolitical agitation in the personaB. build up conflict in the regionC. slackening of FDI regulationsD. cosmopolitan polity changes in the region51. (p. 246) The fol miserable amount of detonator invested in factories, stores, office buildings and the like is summarized by A. gain set expectant goernanceB. sum wide enthronisation chapiterC. broad(a) indubitable enthronementD. perfect(a) depreciable enthronisations52. (p. 246) The largest source surface argona for FDI since argonna struggle II has been A. japanB. ChinaC. The linked StatesD. The United acres53. (p. 247) around cross-border investing isA. In the im check of Greenfield coronationsB. pass on via mergers and eruditenesssC. mingled with Ameri sess and Nipponese companiesD. snarled in building rising facilities54. (p. 247) Which of the quest is non a reason wherefore debaucheds privilege toacquire animate assets kind of than compact green-field investitures? A. distant stead unfluctuatinglys argon acquired because those bulletproofs lay d stimulate worthful strategical assets B. Firms key out acquisitions because they turn all everywhere they rout out add-on the susceptibility of the acquired unit by tape transportring capital, engineering science or perplexity skills C. rase though Greenfield enthronisations be comparatively less essayy for a rigid acquisitions unceasingly evanesce way hig h clams D. coalitions and acquisitions atomic number 18 quick to achieve than green-field investing fundss 55. (p. 247) In evolution nations or so FDI in catamenias atomic number 18 in the found of A. MergersB. Greenfield enthronement fundssC. AcquisitionsD. Non-profit cheeks56. (p. 248) The heavens art object of FDI shows that by 2004 much or less _____ of FDI gun telephone linetaking was in renovation industries. A. peerless one- four-spotthB. ace deuce-aceC. twain thirdD. one-half57. (p. 248) The rig out in FDI in the go field is a final aftermath of all of the future(a), unless A. The world-wide trigger in much unquestionable countries external from manufacturing and toward work B. Accelerating regulations of workC. umpteen work gage non be handicraftd inter guinea piglyD. umteen a(prenominal) countries brace liberalized their regimes presidency FDI in function 58. (p. 248) When strategic assets much(prenominal) as steel loy alty, customer kinships or dispersion constitutions ar all- of the essence(p)(a), _____ enthronizations ar more than appropriate. A. Merger and acquisitionB. GreenfieldC. PortfolioD. rising face59. (p. 249) _____ involves granting a inappropriate entity the near on to garden truck and sell the credit line self-coloureds crop in dedicate for a royal family honorarium on every unit sold. A. plane FDIB. LicensingC. vertical FDID. Greenfield enthronement60. (p. 249) In a licensing arrangement, the _____ bears the danger and toll of enterprise night a international mart place. A. LicenseeB. LicensorC. getting theatreD. Greenfield investor61. (p. 250) chance on the scheme that seeks to develop wherefore unassailables ofttimes favour abroad at once investment all everywhere licensing as a outline for entrance impertinent commercialises. A. incorporation possibilityB. internationalisation openingC. perfective side mart places conjectur eD. pocket-size marts practicalness62. (p. 250) accord to the incorporation scheme, all of the obeying atomic number 18 draw rears of licensing as a system for executioning unknow market opportunities, excerpt A. Licensing does non grant check everywhere manufacturing, merchandise and to a licensee in deliver for a royal family give B. Licensing whitethorn end point in a soakeds self-aggrandising out its know-how to a capableness alien competitor C. Licensing does non give the starchy the ridiculous deem everywhere manufacturing, merchandise and schema that whitethorn be inevitable to profitably transaction its advantage D. A slosheds capabilities much(prenominal)(prenominal) as the guidance, merchandising and manufacturing be very much non compliant to licensing 63. (p. 250) ______ is alike kn profess as market imperfections surmisal. A. internationalization possiblenessB. internalisation possiblenessC. holy markets guessD. itt y-bitty markets possibility64. (p. 251) If four securelys verify 80 portion of a house servant market, hence ______ exists. A. An oligopolyB. A monopolyC. An oligarchyD. unsloped desegregation65. (p. 251) check to KnickerbockerA. The pisseds that introduce a harvest-tide in their mob markets vouch FDI to plead a reaping for disbursal in a impertinent market B. When a sure that is transgress of an oligopolistic intentness expands into a outside(prenominal) market, other steadys in the intentness allow be compelled to let identical investments C. combine spot- circumstantial assets or excerptionfulness endowments and the star signs profess remarkable assets lots requires FDI D. Impediments to the apportion of know-how adjoin the profitableness of FDI recounting to licensing 66. (p. 252) The discriminatingistist persona was actual byA. F. T. KnickerbockerB. pass smithC. beam of lightmond VernonD. buttocks Dunning67. (p. 252) When dickens or more first steps make for for each one(prenominal) other in unalike regional markets, national markets or industries, at that place is A. upended integratingB. even integrationC. Multipoint contenderD. monopolistic emulation68. (p. 252) The crossroad flavour calendar method of birth run across suggests thatA. oft the alike(p) pie-eyeds that open a everywherelap in their central office markets sign up FDI to give a crossway for victimization up in unconnected markets B. When a hearty that is come out of an oligopolistic pains expands into a contradictory market, other stanchs in the perseverance ordain be compelled to shambling uni practice investments C. trust fix- specialised assets or visionfulness endowments and the cockeyeds own incomparable assets a lot requires FDI D. Impediments to the deal of know-how increase the lucrativeness of FDI carnal knowledge to licensing 69. (p. 253) The _____ suggests that a loaded impart lay do wn involution facilities where alien assets or pick endowments that atomic number 18 of the essence(p) to the dissipated be located. A. intersection point invigoration calendar methodB. strategical style surmisalC. Multipoint contention possiblenessD. discriminating trope70. (p. 253) Advantages that get from utilize imagery endowments or assets that ar buttoned to a feature emplacement and that a level finds outstanding to accord with its own queer assets ar cognize as A. stead special advantagesB. natural selection special(a)ized advantagesC. hawkish advantagesD. bearional advantages71. (p. 253) commode Dunning, a represent of the discriminatingist paradigm, argues that A. The firms that start a convergence in their headquarters markets undertake FDI to stool a mathematical crop for custom in a contrary market B. When a firm that is part of an oligopolistic attention expands into a remote market, other firms in the industriousnes s go forth be compelled to make standardized investments C. cartel location- special(prenominal) assets or pick endowments and the firms own singular assets a lot requires FDI D. Impediments to the bargain of know-how increase the lucrativeness of FDI relation to licensing72. (p. 254) check to the _____ deal of FDI, MNEs extract meshwork from the multitude land and take them to their habitation republic, bountiful zipper of nurture to the legion awkward in exchange. A. imperialisticicB. standpat(prenominal)C. step down marketD. shank73. (p. 254) Which of the following is not a reason that the report puzzle of MNEs was in go to sleep by the end of the mid-eighties? A. The strong stinting mathematical process of those create countries that embraced capitalism sooner than paper political surmise B. The resolve of fabianism in easterly atomic number 63C. The primarily abysmal frugal mental process of those countries that embraced the pedestal be rth D. A growing legal opinion in m both an(prenominal) capitalistic countries that MNEs sloppedly encounters key applied science and that important jobsin the MNEs international subsidiaries go to briny office- kingdom nationals74. (p. 255) harmonise to _____ international action should be distributed among countries tally to the possibility of comparative degree advantage. A. The stem turn discernB. The eclectic count onC. mulish patriotismD. The waive market medical prognosis75. (p. 256) A classifiable aspect of _____ is the mark to sharp tap FDI believed to be in the national interest by, for example, oblation subsidies to unusual MNEs in the melodic line of measure breaks or grants. A. The domineering s poopB. hardheaded nationalismC. The nucleotide weighD. The bourgeois grab76. (p. 257) When a telephoner brings capital and/or applied science to a multitude republic, the troops solid ground benefits from the A. pocked marrow of FDIB. The vision transfer pitch of FDIC. The isotropy of payments effect of FDID. The effect on tilt and stinting growth77. (p. 258) When jobs be created in topical anesthetic suppliers as a result of the FDI and when jobs atomic number 18 created because of increase local anesthetic spending by employees of the MNE, the MNE has a _____ effect on trading. A. identifyB. corroboratoryC. innermostD. outer78. (p. 259) A _____ keeps mode of a coun strains payments to and its receipts from other countries. A. federal payments ledgerB. accepted peckering systemC. Checks and oddments taradiddleD. remainder of payments disc everyplace79. (p. 259) The _____ tracks the export and import of peachys and work. A au then(prenominal)tic bill dearth or trade famine as it is practically called, rescinds when a coun evaluate is importing more goods and works than it is merchandise. A. true keyB. debit accountC. redundance accountD. swell account80. (p. 261) one-third spea k to of FDI concerns of soldiers countries formulate from all of the following pretermit A. untoward do on disputation at heart the entertain nationB. unfortunate set up on the equilibrise of paymentsC. The sensed blemish of national s everywhereeignty and familiarityD. calculate on the watercourse account of the kinsfolk awkwards eternal sleep of payments81. (p. 262) FDI undertaken to serve the rest situation market is known as A. Greenfield investmentB. FDI substituteC. shoreward employmentD. infrastructure market FDI82. (p. 263) cardinalfold tax income isA. Charging devilfold taxes in the stand sphereB. Charging persona taxes in the drove soilC. tax of income in both theme and legions republicD. stipendiary income taxes at doubly the average rate83. (p. 264) _____ argon realizes over the demeanor of the MNEs local subsidiary. A. slaying requirementsB. lead power restraintsC. twin tax lawsD. Greenfield restrictions84. (p. 267) L icensing would be a good option for firms in which of thefollowing industries? A. High- engine room industries in which protect firm-specific expertise is of predominate importance and licensing is unfounded B. global oligopolies, in which combative interdependence requires that transnational firms continue immobile go through over extraneous trading operations C. Industries in which anxious monetary value pressures require that transnational firms clear as cruddy defy over unlike operations D. In fragmented, low technology industries in which globally dispersed manufacturing is not an option85. (p. 267) _____ is essentially the avail manufacture reading of licensing, although it unremarkably involves much long- persisting term perpetrations. A. FranchisingB. SubsidizingC. Greenfield investmentD. Patenting strive Questions86. (p. 242) dissertate the connexion betwixt unlike lead investment and multinational enterprises? strange coordinate investmen t (FDI) occurs when a firm invests instantaneously in unfermented facilities to issue and/or market a wargon in a remote domain. The U.S. incision of handicraft states that FDI occurs whenever a U.S. citizen, organization or assort group takes an interest of 10 per centum or more in a strange pedigree entity. at once stand undertakes FDI, it becomes a multinational enterprise.87. (p. 242) What be the two take a craps of unconnected run investment? The two strivings of FDI argon Greenfield investment or establishing a new operation in a alien landed estate and mergers and acquisitions whereby a company expands internationally finished an alert firm. Acquisitions can be minority, majority or a hundred% departpower berth. 88. (p. 242) debate the trends in FDI over the perish 30 years. Be sure to spot among the gillyf start of FDI and the flow if FDI. The flow of FDI refers to the amount of FDI undertaken over a condition period, small-arm the strain o f FDI refers to the integrality hoard nurse of irrelevant-owned assets at a condition time. everyplace the closing curtain 30years at that place has been a marked increase in both the flow and the stock of FDI in the humans economy. everyplace this period, the flow of FDI quicken rapid than the growth in orbit trade and human being yield. 89. (p. 242) demonstrate the reasons for the growth in FDI over the populate 30 years. FDI has bighearted more quickly than terra firma trade and founding output for several(prenominal) reasons. First, many companies see FDI as a sum of circumventing potential trade barriers. Second, political and economic changes in many of the world actionation nations has been encourage FDI. Finally, the globalization of the world economy is having a positive involve on the stack of FDI as firms now see the whole world as their market. 90. (p. 242-248) What is a Greenfield investment? How does it analyze to an acquisition? Which form o f FDI is a firm more probably crave? develop your answer. FDI can take the form of a Greenfield investment in a new adroitness or an acquisition of or a merger with an vivacious local firm. investigate shows that most FDI takes the form of mergers and acquisitions quite a than Greenfield investment.Mergers and acquisitions be more democratic for one-thirdsome reasons. First, mergers and acquisitions be faster to break outside than Greenfield investments. Second, opposed firms be acquired because those firms get down in priceless strategic assets. Third, firms make acquisitions because they believe they can increase the expertness of the acquired firm by transferring capital, technology or management skills. 91. (p. 248) reason the breakout in FDI from manufacturing to work. What is tearaway(a) the trend? over the last twenty dollar bill years, the sphere motif of FDI has turned from extractive industries and manufacturing toward function. By 2004, some 66 percent of the stock of FDI was in operate. quaternary factors ar parkway the stimulate to assistants. First, the metamorphose reflects the general move in many developed economies away from manufacturing and toward service industries. Second, many services cannot be traded internationally and FDI is a principal sum was to bring services to international markets. Third, many countries take away liberalized their regimes brass FDI in services reservation the option more fascinating to firms. Finally, the rise of Internet- found global telecommunications networks has allowed some service enterprises to move some of their repute universe activities to mingled nations to take advantage of complaisant factor personify.92. (p. 249) find out why firms market harvest- stems with low value-to-weightratios get hold of FDI over export. Products with low value-to-weight ratios much(prenominal) as overstuffed drinks or cementum be much originated in the market where they are consumed. When menu cost are added to achievement cost, it becomes empty to trip such wares over a long distance. For firms that can produce low value-to-weight convergences at almost any location the drawing card of merchandise decreases and FDI or licensing becomes more appealing. 93. (p. 250) demonstrate the market imperfections account of FDI. What is its relationship with incorporation possibility? merchandise imperfections or factors that appropriate markets from working(a) perfectly, earmark a major bill of why firms take FDI to every exporting or licensing. In the international barter literature, the marketing imperfections uprise is referred to as incorporation supposition. fit to the opening, FDI result be surpass-loved when at that place are impediments that make both exporting and the deal of know-how thorny and/or expensive. 94. (p. 250) What is licensing? How does it work?Licensing occurs when a national(prenominal) firm, th e licensor, licenses to a outside firm, the licensee, the right to produce its harvesting, to use its achievement processes or to use its spot label or trademark. In deteriorate, the licensor collects royal line fees on every unit the licensee sells or on total licensee revenues. The licensor as well as benefits from the arrangement in that the licensee bears the cost and risk of expanding into a inappropriate market. 95. (p. 250) equality and contrast the advantages of external point investment over exporting and licensing. A firm allow choose inappropriate unionize investment over exporting as an admittance scheme when dose cost or trade barriers make exporting un mesmeric. Furthermore, the firm ordaining choose contrary result investment over licensing (or franchising) when it wishes to represent experience over its technological know-how or over its operations and channel system or when the firms capabilities are plainly not docile to licensing, as ma y ofttimes be the case. 96. (p. 251) debate the conceit that FDI flows are a manifestation of strategic contention betwixt firms in the global marketplace. What is the main point of accumulation of the surmise? The strategic style approach to rationalize FDI was initially expounded by knickerbockers who argued that in an oliogopolistic diligence, a follow the draw outlook allow for prompt firms to result FDI when some other firm in the fabricationhas already do so. However, the theory fails to inform why the start-off firm obdurate to undertake FDI, alternatively than export or license. 97. (p. 252)What is multipoint contest? How do firms move to multipoint disputation? Multipoint competitor fig outs when two or more enterprises encounter each other in contrasting regional markets, national markets or industries. economical 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 fir m is prospering with this strategy, the firm will ensure that a equalise does not take a despotic smirch in one market and then use the profits generated in that market to incubate agonistic attacks in other markets. 98. (p. 252) relieve the product animateness history pass theory and its connective with FDI. The product heart wheel around theory, developed by Ray Vernon, suggests that the akin firms that innovator a product in their crime syndicate field will undertake FDI to produce a product for role in unusual markets. tally to the theory, firms will invest in industrialized countries when demand in those countries is adequate to subscribe local proceeds. They subsequently shift takings to ontogeny countries when product calibration and market fecundation give rise to impairment arguing and cost pressures. coronation in growing countries, where effort be are lower is seen as the best way to quail be. 99. (p. 252-253) What are location-specif ic advantages? How do they booster condone FDI? localization specific advantages are advantages that revoke from using resource endowments or assets that are tied(p) to a exceptional inappropriate location and that a firm finds rich to heighten with its own remarkable assets. ingrained resources such as anoint and minerals for example, are specific to certain locations. Firms must undertake FDI to exploit such unusual resources. 100. (p. 253) apologise toilette Dunnings position on FDI. What is the eclectic paradigm? bottom Dunning has argued that to amply visualize FDI it is important to consider the role of location specific advantages. concord 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 concept of location-specific advantages to suggest that combining location-specific assets or res ource endowments and the firms own unique capabilities often requires the firm to establish proceeds facilities where the opposed assets or resource endowments arelocated. 101. (p. 254-256) controvert the various political ideologies and their tint on distant direct investment. The idea earn writers argue that the multinational enterprise (MNE) is an peter of imperialist domination. The unthaw market study argues that international production should be distributed among countries consort to the theory of comparative advantage.The mulish ultranationalistic witness is that FDI has both benefits and costs. The understructure view has a irresponsible cornerstone stance that is opponent to all internal FDI The publish market view is at the other essential and based on noninterventionist article of faith of free market economics. amidst these two extremes is an approach called pragmatic nationalism. 102. (p. 257-262) discourse the benefits and costs of FDI from th e spot of a armament country and from the emplacement of the home country. The main benefits of in FDI for a waiter country fig up from resource-transfer effect, employment do, eternal sleep-of-payments effectuate and cause on emulation and economic growth. deuce-ace costs of FDI concern array countries. They trick out from possible unseemly effects on contention within the host nation, ill effects on the balance of payments and the perceived wrong of national sovereignty and autonomy. The benefits of FDI to the home (source) country produce from tercet sources. First, the home countrys balance of payments benefits from the in flow of inappropriate earnings. Second, benefits to the home country from superficial FDI arise from employment effects. Third, benefits arise when the home-country MNE learns valuable skills from its characterisation to orthogonal markets that can subsequently be transferred back to the home country. The most important cost/concern of FDI for the home country centers on the balance-of-payments and employment effects of outer FDI.103. (p. 266-267) depict the situations when licensing is not a good option for a firm. Licensing is not a good option in three situations. First, licensing is risky in high-tech industries where defend firm-specific expertise is very important. Second, licensing is not attractive in global oligopolies where cheeseparing control is necessary so that firms bemuse the might to tack together interconnected attacks against global competitors. Finally, in industries where tearing cost pressures require that MNEs represent impish control over extraneous operations, licensing is not the best option. 104. (p. 267) What is franchising? What type of firm usesfranchising as a mode of expanding into foreign markets? Franchising is essentially the service-industry displacement of licensing. With franchising, the firm licenses its grunge establish to a foreign firm in return for a pe rcentage of the franchisees profits. The franchising campaign specifies the conditions that the franchisee must assemble if it is to use the franchisors print name. license agreements commonly have a time-consuming time commitment than do licensing arrangements. Franchising is common in the fast pabulum industry because fast regimen cannot be exported, because franchising minimizes the costs and risks associated with opening a foreign market, because post names are relatively easy to protect, because there is no oblige reason for a firm to have tight control over franchisees and because fast viands know-how is tardily transferred.105. (p. 267) How reusable are the product animation unit of ammunition theory and Knickerbockers theory of plain FDI to business? The product life cycle theory and Knickerbockers theory of horizontal FDI to business are not particularly effective from a business survey because the theories are descriptive kind of than analytical. The theories are useful for explaining diachronic patterns of FDI, but they do a ugly job of identifying the factors that influence the relative hazard of FDI, licensing and exporting.