ECO 410 Week 10 Quiz – Strayer
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Quiz 9 Chapter 17 and 18
Foreign Direct Investment and
Political Risk
17.1 Sustaining and Transferring Competitive
Advantage
Multiple Choice
1) An
example of economies of scale in financing include:
A) being
able to access the Euroequity, Eurobond, and Eurocurrency markets.
B) being
able to ship product in shiploads or carloads.
C) being
able to use large-scale plant and equipment.
D) all
of the above
2) Which
of the following is NOT a factor of Porter's "diamond of national
advantage"?
A)
factor conditions
B)
demand conditions
C)
related and supporting industries
D) All
of the above are factors of the diamond of national advantage.
3) The
OLI paradigm is an attempt to create a framework to explain why MNEs choose
________ rather than some other form of international venture.
A)
licensing
B) joint
ventures
C)
foreign direct investment
D)
strategic alliances
4) The O
in OLI refers to an advantage in a firm's home market that is:
A)
operator independent.
B)
owner-specific.
C)
open-market.
D)
official designation.
5) The
owner-specific advantages of OLI must be:
A)
firm-specific.
B) not
easily copied.
C)
transferable to foreign subsidiaries.
D) all
of the above
6) A/An
________ would be an example of an owner-specific advantage for an MNE.
A)
patent
B) economy
of scale
C)
economy of scope
D) all
of the above
7) The L
in OLI refers to an advantage in a firm's home market that is a:
A)
liability in the domestic market.
B)
location-specific advantage.
C)
longevity in a particular market.
D) none
of the above
8) A/An
________ would be an example of a location-specific advantage for an MNE.
A)
patent
B)
economy of scale
C)
unique source of raw materials
D)
possession of proprietary information
9) The I
in OLI refers to an advantage in a firm's home market that is an:
A)
internalization.
B)
industry-specific advantage.
C)
international abnormality.
D) none
of the above
10) A/An
________ would be an example of an internalization advantage for an MNE.
A)
patent
B)
economy of scale
C)
unique source of raw materials
D)
possession of proprietary information
True/False
1) MNEs
that are resident in liquid and unsegmented capital markets are more likely to
be able to demonstrate financial strength by achieving and maintaining a global
cost and availability of capital.
2) A
strongly competitive home market tends to dull the competitive advantage
relative to firms located in less competitive home markets.
3) The
authors were unable to identify in lesser developed countries specific firms
that are nearing the status of global MNE.
Essay
1) List
and explain three strategic motives why firms become multinationals and give an
example of each.
2) What
does the OLI Paradigm propose to explain? Define each component and provide an
example of each.
17.2 Deciding Where to Invest
Multiple Choice
1) Which
of the following is NOT true regarding behavioral observations of firms making
a decision to invest internationally?
A) MNEs
initially invest in countries with a similar "national psychic."
B) Firms
eventually take greater risks in terms of the national psychic of countries in
which they invest.
C)
Initial investments tend to be much larger than subsequent ones.
D) All
of the above have been observed.
True/False
1) In
practice, when expanding into other countries, firms have been observed to
follow a sequential search pattern as described in the behavioral theory of the
firm.
2) As a
general rule, the decision about where to invest abroad for the first time is
the same as the decision about where to reinvest abroad.
17.3 How to Invest Abroad: Modes of Foreign
Involvement
Multiple Choice
1) Which
of the following is NOT an advantage to exporting goods to reach international
markets rather than entering into some form of FDI?
A) fewer
political risks
B)
greater agency costs
C) lower
front-end investment
D) All
of the above are advantages.
2) Which
of the following is an advantage to exporting goods to reach international
markets rather than entering into some form of FDI?
A) fewer
agency costs
B) fewer
direct advantages from research and development
C) a
greater risk of losing markets to copycat goods producers
D) an
inability to exploit R&D as effectively as if also invested abroad
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