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Exam 11: Foreign Direct Investment and Collaborative Ventures

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Question 21

True/False

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Mergers occur more often between companies of different sizes because a large company can rapidly absorb the costs of a smaller company, which lacks economies of scale.

A) True
B) False

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Question 22

Multiple Choice

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International collaborative ventures are best characterized by which of the following?

A) pooling of resources from firms of one nation to enter a foreign market
B) agreement by firms to share resources and technology across borders
C) formation of cross-border partnerships to enter foreign markets
D) establishment of a physical presence in a foreign market

E) C) and D)
F) All of the above

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Question 23

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Which of the following leading MNEs has the most foreign subsidiaries and affiliates?

When Home Depot entered the Mexican market by purchasing Home Mart, a domestic store chain, the firm was making a Greenfield investment.

Which of the following is one of the first questions managers should consider before entering a collaborative venture?

Ciao Manufacturing Location The Italian car company, Ciao, has made plans to expand its operations by building a manufacturing facility in a foreign market. Ciao has been very successful selling its small, economical, and stylish cars in the Italy and Spain, and firm managers believe that the Ciao cars will be equally profitable in other markets. Ciao managers are trying to determine whether Canada or Russia would be the best location for a new automobile manufacturing facility. -Which of the following questions is most important for Ciao managers to evaluate in their decision regarding the location of the new manufacturing facility?

In a short essay, explain why one of the primary motives for a firm's international expansion-to compete with key rivals in their own markets-may also be one of the biggest challenges for retailers pursuing new international markets.

In a short essay, discuss the four key differences between project-based collaborations and equity joint ventures.

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

The level of taxes in a country represents which of the following types of factors to be considered when selecting an FDI location?

Cross-licensing agreements are a type of project-based venture in which each partner agrees to distribute the products and services of the other firm for a specific percentage of profits.

All of the following are typical reasons firms enter equity joint ventures except ________.

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

In a short essay, discuss strategies that managers can employ in order to increase the chances of a successful collaborative venture.

Joint ventures are a primary entry strategy that focal firms use to enter a foreign market with participating firms.

Which of the following best exemplifies corporate social responsibility?

In a short essay, explain the difference between vertical FDI and horizontal FDI. To illustrate your explanation, provide examples of firms that successfully utilize each type of FDI.

When a company erects green buildings to house its new call center in Chennai, it is practicing ________.

ABC Appliance The ABC Appliance Corporation is a Florida-based manufacturer of refrigerators, dishwashers, and other large household appliances. ABC takes advantage of NAFTA, and as a result, the firm has loyal customers across North America. ABC managers would like to expand into the Asian market, but are unsure of the best way to do so. ABC managers are meeting to discuss various possibilities for entering the Asian market. -Which of the following most likely supports a decision to enter the Asian market by building a factory near Tokyo?

In a short essay, discuss three reasons that firms often seek new market opportunities.