BUS1203 - T8: Foreign Direct Investment

All of the following are characteristics of foreign direct investment except:

• involves substantial risk

• simplifies foreign market entry

• necessitates significant resources

• implies local presence and operations

Which of the following is often a motive of firms in the mining industry to enter new foreign markets?

• Access natural resources

• Skilled pools of labor

• Increase refining capacity

• Low minimum wages

Which of the following most likely explains why manufacturing firms often establish facilities in Mexico, China, and Eastern Europe?

• Skilled workforce

• Few trade barrier

• Natural resources

• Inexpensive labor

Governments encourage inward FDI through incentives for all of the following reasons except:

• increase tax revenue

• transfer skills and technologies

• meet customer demands

• provide local jobs and capital

Which of the following best explains why some service industry firms most likely enter foreign markets through FDI?

• The firm's service cannot be duplicated by a foreign based franchisor.

• The service of the firm requires tough intellectual property laws.

• The service offered by the firm requires personal interfacing with customers.

• The firm's service is not successful domestically, so globalization is required.

Which of the following best exemplifies corporate social responsibility?

• A computer firm charging a fee for the recycling of old computers

• An automobile manufacturer selling low fuel economy cars and trucks

• Telecommunications charging high rates to low income customers

• An automotive battery firm offering to recycle car batteries free of charge

All of the following are governmental factors that firms must consider when selecting an FDI location except:

• market proximity

• transparency

• bureaucracy

• political stability

A firm that builds a new manufacturing facility in a foreign market is participating in which of the following?

• Acquisition

• Merger

• Greenfield investment

• Equity participation

The purchase of an existing company or facility is known as a(n):

• greenfield investment

• merger

• acquisition

• equity joint venture

Two catering companies that join to form a new, larger catering company are an example of which of the following?

• Merger

• Acquisition

• wholly owned direct investment

• international strategic alliance