Mergers and acquisitions differ from greenfield investments in that:
A. greenfield investments are quicker to execute than mergers and acquisitions.
B. greenfield investments are undertaken to take advantage of valuable strategic assets, such as brand loyalty and trademarks or patents, of a foreign competitor.
C. the majority of FDI flows into developed nations are in the form of greenfield investments rather than mergers and acquisitions.
D. the majority of FDI flows into developing nations is in the form of cross-border mergers and acquisitions.
E. the percentage of mergers and acquisitions is lower than greenfield investments in developing nations.
53._____ involves producing goods at home and then shipping them to the receiving country for sale.
54.The _____ states that combining location-specific assets or resource endowments and the firm's own unique assets often requires FDI and it also requires the firm to establish production facilities where those foreign assets or resource endowments are located.
A. strategic trade policy
B. integration approach
C. scramble theory
D. eclectic paradigm
E. infant industry argument
55.3M, an American firm, manufactures adhesive tapes in St. Paul, Minnesota, and ships the tapes to South Korea for sale. According to this information, which of the following is being done by 3M?
56.Which of the following involves granting a foreign entity the right to produce and sell the firm's product in return for a royalty fee on every unit sold?
57.FDI is risky because of the problems associated with:
A. sharing a valuable technological know-how with a potential competitor.
B. increase in the transportation costs, especially for those products that have a low value-to-weight ratio.
C. doing business in a different culture where the rules of the game may be very different.
D. the possibility of increase in trade barriers such as import tariffs or quotas.
E. increased production costs.
58.The viability of an exporting strategy is often constrained by transportation costs, particularly of products that have a _____ and that can be produced in almost any location.
A. high local content requirement
B. low total landed cost
C. low value-to-weight ratio
D. low licensing tariff
E. high marginal cost
59.Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting?
A. The presence or threat of trade barriers
B. The costs of acquiring a foreign enterprise
C. The costs of establishing production facilities in a foreign country
D. The risk of giving away valuable technological know-how to a potential foreign competitor
E. The possibility of diminishing returns
60.A firm will favor FDI over exporting as an entry strategy when:
A. the costs of establishing production facilities are high.
B. the transportation costs or trade barriers are high.
C. there are problems associated with doing business in a different culture.
D. the products involved have a high value-to-weight ratio.
E. the firm wants to occupy a position that falls inside the efficiency frontier.
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