MGMT 495 Quiz

A firm establishing a manufacturing plant in a foreign
country due to the cheap labor costs in that country is an
example of the _____ advantage that the firm enjoys.

• Location

• Ownership

• Internalization

• Externalization

_____ refers to price setting at a level higher than the
competitive level by monopolists.

• Collusive Price Setting

• Predatory Pricing

• Mark-up Pricing

• Dumping

If a firm engages in final assembly in its home operations,
then which of the following operations of the firm in a
foreign country would be considered a downstream
vertical FDI?

• Research and Development

• Components Procurement

• Marketing

• Final Assembly

Firms prefer FDI to licensing because FDI_____.

• increases the chances of opportunism when
  dealing with a host nation entity

• requires complete dissemination of
  technological know-how to host nation entity

• protects the firm from economic
  agglomeration

• provides the firm with direct ownership to its
  foreign assets

An industry with heterogeneous products, in which rivals
are forced to compete on price, is likely to lead to collusion.

• True

• False

Which of the following statements best describes an FDI?

• Setting up subsidiaries in foreign locations to
  do in-house work

• Turning over an organizational activity to an
  outside supplier to perform on behalf of the firm

• Outsourcing an in-house activity to another
  domestic firm

• Assigning firm activities to foreign firms in
  neighboring countries

Inside directors are more independent and can better
safeguard shareholder interests.

• True

• False

If Apple, making smartphone, invests in iPhone dealerships
in Asia but does not engage in distribution in the United
States (Apple’s host country), then Apple’s Asian
investment would be considered a(n) _____.

• downstream vertical FDI

• upstream vertical FDI

• Horizontal FDI

• FPI

Mutual forbearance refers to retaliatory attacks on a
competitor's other markets if this competitor attacks a
firm's original market.

• True

• False

Which of the following is a primary cost of FDI to home
countries?

• Loss of sovereignty

• Increase in local competition

• Capital outflow and job loss

• Increased exports of components and services
  to host countries