Multinationals (MNCs) and Foreign Direct Investment (FDI)

Which of the following best defines a multinational corporation?

• A company that exports to many countries

• A large company that imports from many countries

• A company that operates in many different countries

• A company that produces goods and services for a large market

Which of the following is NOT an example of a MNC?

• McDonald's

• Nike

• British Petroleum

• Apple

• Laoganma

Which of the following is NOT a key feature of MNCs?

• A large amount of assets, including both capital and money

• Access to highly qualified managers and professionals

• Limited influence over government decision making

• An ability to exploit economies of scale and lower average costs with expansion

• Significant advertising and marketing budgets

Which of the following best describes the term 'Foreign Direct Investment' or FDI?

• When a country makes an investment into a company

• When a domestic country invests into its own companies

• When a company makes an investment into a foreign country

• When foreign individuals invest in domestic stock markets

Select the three options below that represent three reasons for the emergence of MNCs and FDI:

• Economies of scale

• Higher transport and communication costs

• Increased protectionism and trade restrictions

• Access to cheap materials

• Large customer populations in foreign markets

Air travel has significantly dropped in cost and the number of destinations have risen.

This corresponds to which of the following reasons for the emergence of MNCs:

• Economies of scale

• Access to cheap materials

• Lower transportation costs

• Access to customers in different regions

True or false: Sony (索尼中国) , the Japanese electronics company, generated more than 70% of its revenue outside of Japan.

• True

• False

Which of the following methods would NOT attract FDI into a country?

• Tax breaks and subsidies

• Grants and low interest loans

• Relaxed regulations and reduced restrictions

• Political instability and uncertainty

Job creation is a significant advantage for countries that receive FDI.

Which situation below indicates that a foreign company has created jobs in the United States?

• American car manufacturer Ford closes down its car production plant in Detroit, Michigan and moves to Mexico.

• Apple partners with electronics producer Foxconn in Shenzhen to produce its iPhone and iPad products.

• Japanese car manufacturer Honda builds a production plant in Marysville, Ohio and expands to 11 other locations as well.

• American company Toys R Us closes down its retail stores in the US and starts opening them in China.

Select the three advantages of MNCs and FDI to countries below:

• Investment in infrastructure (the development of roads, highways and information networks)

• MNCs train and educate workers when they locate in foreign countries

• MNCs reduce the capital stock in foreign countries by extracting technology and high-tech equipment.

• MNCs are able to minimise their tax burden to a host country and therefore limit paying taxes to the government.

• MNCs profits are taxable and can generate a significant source of revenue for the government.