Global Marketing Test Bank

Refenrences:http://crab.rutgers.edu/~ckaufman/gntestbank.html http://www.oocities.org/duehing/ibus330quiz4.txt

MAJOR MODELS AND FRAMEWORKS : We have covered several major models and analytical frameworks during this course that enable you to analyze a situation in making marketing-related decisions. 1. Changes in consumer buying and usage habits in recessionary conditions (p. 93) 2. ABCD Model (p. 108): consumer access, buying, consumption, disposal as a framework to organize the examination of the various aspects of consumer response. Built on industrial models of B2B. 3. Drivers Model (p. 254): organizes a four-component model of various major factors that affect a business's strategies 4. Opportunity Matrix (p. 286): allows the company to compare perceived level of political risk and perceived level of opportunity in a destination market. 5. Types of Tariffs (p. 151) 6. Segmentation (p. 219) - grouping of consumers based on factors meaningful to our business. 7. Positioning (p. 235, 236, 240): Definition, gap analysis, types, use of positioning 8. Market Entry Flowchart (p. 283, 288) - a systematic analysis 9. Market Entry Table (p. 309) - why are certain methods chosen? 10. Analytical product models, comparative analysis of attributes (p. 357, 363): taste tests, product concept tests, conjoint analysis, analogy - these are methods from new product development that allow us to analyze consumer reactions to various product attributes 11. Product standardization, adaptation - in creating a global brand, when and what can be standardized? What can and should be adapted? Sanex case example 12. Branding and Country of Origin Effects (p. 404) - what types of brand emphasis can be given? What attributes of a brand contribute to the brand image? 13. Pricing (425, 435, 478): euro 14. Communications: model, adaptations - we examine the specific encoding that is chosen when communicating with consumers in various cultures. Do our meanings communicate what we intend? Can the message be decoded appropriately? 15. Sales, Table p. 494 16. Global E-commerce issues: p. 605, 611

QUESTIONS: The Questions below illustrate the types of major issues that we have been covering in the course since the Midterm. There are varied formats. The test bank will be updated periodically to represent our discussions. Chapter 11 PRODUCT CONCEPTS Ikea, the Swedish furniture chain, insists that all its stores carry the basic product line with little room for adaptation to local tastes. If research of the U.S. market showed that Americans preferred larger beds than their Swedish counterparts, which of the following strategies would be advisable for Ikea? a. standardization. b. new product development. c. adaptation. d. withdraw from market. e. lower prices to encourage attitude change. Answer: (c) Difficulty: (1) Knowledge: (A) Page: 34 6 In the Australian market, rather than manufacturing disposable diapers, Proctor & Gamble decided to import them since the size of the market did not warrant local manufacturing according to P&G. Unfortunately, by using packaging designed for the Asian region with nonEnglish labeling, P&G alienated its customers in Australia. This is an example of improper: a. global policy decisions. b. pricing decisions. c. brand policy decisions. d. product policy decisions. e. company policy decisions. Answer: (d) Difficulty: (3) Knowledge: (F) Page: 34 7 Explain what could have been done to prevent the problem. Suppose that you have been hired to correct the problem. What would you do? The primary advantage to using a standardization approach to marketing a product in the international arena is: a. minimization of costs (which can be passed on to customers). b. more profit. c. less service complaints. d. less product returns. e. standard budgets. Answer: (a) Difficulty: (2) Knowledge: (F) Page: 3 51 Which of the following would NOT be one of the five key product characteristics that contribute to its acceptance? a. low service maintenance b. relative advantage c. compatibility d. complexity e. trialability Answer: (a) Difficulty: (3) Knowledge: (F) Page: 3 57-358 In the new product roundtable, a student brought in a product that promised to be a tea for babies that numbed their gums during teething. To what extent does the new product offer more perceived value to potential adopters than existing alternatives, would be a

Questionthat best fits with which of the following key product characteristics acceptance categories? a. observability b. relative advantage c. compatibility d. complexity e. trialability Answer: (b) Difficulty: (1) Knowledge: (A) Page: 3 57 Is the product consistent with existing values and attitudes of the individuals in the social system, would be a Questionthat best fits with which of the following key product characteristics acceptance categories? a. observability b. relative advantage c. compatibility d. complexity e. trialability Answer: (c) Difficulty: (2) Knowledge: (A) Page: 3 57 Another student brought a white fungus product that required two hours of soaking before it could be used in a recipe for soup or stew. Is the product easy to understand or use, would be a Questionthat best fits with which of the following key product characteristics acceptance categories? a. observability b. relative advantage c. compatibility d. complexity e. trialability Answer: (d) Difficulty: (3) Knowledge: (A) Page: 3 58 Also a product example could consider how much change is required of the consumer in adopting the product into their own lives. Congruent innovations Continuous innovations Dynamically continuous innovations Discontinuous innovations If a consumer considered four attributes to be important in the purchase of a TV, by using ________________ the researcher might be able to determine the trade-offs between the different product attributes (such as purchase price or number of channels that could be received) when the consumer evaluated the alternatives for eventual purchase. a. chi-square b. correlation analysis c. focus groups d. regression analysis e. conjoint analysis Answer: (e) Difficulty: (3) Knowledge: (A) Page: 3 63 A(n) ________________ is essentially a field experiment where the new product is marketed in a select set of cities to assess its sales potential and scores of other performance measures. a. attitude screen b. product model c. product concept d. test market e. focus concept

Answer: (d) Difficulty: (2) Knowledge: (F) Page: 3 67 CHAPTER 12 BRAND CONCEPTS A ____________ is a name, term, sign, symbol, or combination of them which is intended to identify the goods and services of one seller or group of sellers and to differentiate them from those of competitors. a. trademark b. patent c. signature d. brand equity e. brand Answer: (e) Difficulty: (1) Knowledge: (F) Page: 3 77 Brand-name awareness, perceived quality, and other associations invoked by the brand name in the customers mind are all illustrations of the concept called _______________. a. proprietary investments. b. brand equity. c. brand warranty. d. local brand name. e. brand mark. Answer: (b) Difficulty: (3) Knowledge: (F) Page: 3 77 All of the following are items that might be used as a checklist for analyzing globalization propositions EXCEPT: a. What is the cost of creating and maintaining awareness and associations for a local brand versus a global one? b. Are there significant economies of scale in the creation and running of a communication program globally? c. Is there value to associations of a global brand or of a brand associated with the source country? d. Is global branding a requirement of forming strategic alliances? e. What local associations will be generated by the global name? Answer: (d) Difficulty: (2) Knowledge: (A) Page: 3 86 With respect to a brand name changeover strategy, the _________________ strategy ties the new global brand name to the existing local brand name. After a transition period, the old name is dropped. a. transparent forewarning b. summary axing c. fade-in/fade-out d. pyramid focusing e. parallel dimension Answer: (c) Difficulty: (1) Knowledge: (F) Page: 3 86 Euro Disney eventually becoming Disneyland Paris (where the Euro shrunk until land could be added in its place) is an example of which of the following brand name changeover strategies? a. transparent forewarning b. summary axing c. fade-in/fade-out d. pyramid focusing e. parallel dimension

Answer: (c) Difficulty: (2) Knowledge: (A) Page: 3 86 When Mars candy company took over Raider candy products and used the theme line Now Raider becomes Twix, for it is Twix everywhere in the world, the company used the ________________ strategy for changing brand names. a. transparent forewarning b. summary axing c. fade-in/fade-out d. pyramid focusing e. parallel dimension Answer: (a) Difficulty: (3) Knowledge: (A) Page: 3 87 When Matsushita uses brand names like JVC & Panasonic as their banner brands, they are using a(n) _______ system. a. domestic branding b. national branding c. manufacturers branding d. store branding or private labeling e. umbrella (corporate) branding Answer: (e) Difficulty: (2) Knowledge: (A) Page: 3 91 . When Nokia (a leading maker of cellular phones) consolidated scores of brand names into their one _________ brand, they found that strength occurred because consumers were able to equate the Nokia quality with more products. a. domestic brand b. national brand c. manufacturers brand d. store brand or private label e. umbrella or banner brand Answer: (e) Difficulty: (1) Knowledge: (A) Page: 3 91 Deciding to move toward global branding is a difficult decision. This must often be considered with respect to the globalization versus localization issue. What are the Questions that might be useful in reaching a decision as to whether to pursue globalization over localization? Answer: The Questionasks you to speculate on the applicability of global versus local brand names. Obviously, cultural differences are a heavy factor. One way to begin the discussion is to remind the students of David Aakers list for analyzing global propositions: 1). What is the cost of creating and maintaining awareness and associations for a local brand versus a global one? 2). Are there significant economies of scale in the creation and running of a communication program globally? 3). Is there value to associations of a global brand or of a brand associated with the source country? 4). What local associations will be generated by the global name? symbol? slogan? imagery? 5). Is it culturally and legally do-able to use the brand name, symbol, slogan across the different countries? 6). What is the value of the awareness and associations that a regional brand might create? CHAPTER 13 - PRICING

When developing a pricing strategy for its global markets, one of the first steps that a company must go through is to decide: a. what the actual price should be. b. how high or low to price. c. how much money will the price bring in. d. what it wants to accomplish with its strategy. e. what form of controls will regulate price. Answer: (d) Difficulty: (3) Knowledge: (F) Page: 4 15 . In the international marketplace, ______ pricing adds international costs and a mark-up to the domestic manufacturing cost. a. dynamic incremental pricing b. export price c. import price d. cost-plus price e. target-return price Answer: (d)Difficulty:(3) Knowledge:(F) Page: 416417 Examples of exporting-related ___ include manufacturing costs, shipping expenses, insurance, and overseas promotional costs. a. incremental costs b. demand costs c. fixed costs d. target costs e. service costs Answer: (a) Difficulty: (2) Knowledge: (F) Page: 4 17 When demand is highly price sensitive, the company needs to consider how it can _____from a global perspective. a. raise prices b. lower prices c. lower service d. raise quality e. reduce costs Answer: (e) Difficulty: (2) Knowledge: (F) Page: 4 17 Recall the examples we had in class of the Japanese products being too expensive for the Indian market if the current price, given in US$, is retained. If Wrigley chewing gum company were to make 3-stick rather than 5-stick packages of gum for the Philippines market, this would be an example of ______ for low percapita income market. a. downsizing b. upgrading c. synthesis d. copying e. paralleling Answer: (a) Difficulty: (2) Knowledge: (A) Page: 4 17 Sales tax rates, tariffs, and price controls are all examples of ______ that can have a direct or indirect impact on the pricing policies of a firm in the international marketplace. a. sales volume policies b. price policies c. government policies d. restrictions e. punishments

Answer: (c) Difficulty: (2) Knowledge: (A) Page: 4 20 There are two ways to deal with the price escalation phenomenon. One of these methods is to cut the export price. The other is to: a. change the promotion strategy. b. position the product as a (super) premium brand. c. position the product as a lower quality brand. d. reduce retailer margins. e. reduce distances that the good must be shipped. Answer: (b) Difficulty: (3) Knowledge: (A) Page: 42 1 Theres many more than this! You can reduce the Cost Insurance and Freight. You can use FTZs. MANY MORE! When the U.S. levied a 10 percent tax on plus-$30,000 luxury cars, Land Rover changed the weight of Range Rover models so they could be classed as a truck and thereby avoid the luxury status, the company was attempting to follow which of the price strategies listed below for lowering the price of an exported product? a. rearrange the distribution channel. b. eliminate costly features (or make them optional). c. downsize the product. d. adapt the product to escape tariffs or tax levies. e. assemble or manufacture the product in foreign markets. Answer: (d) Difficulty: (1) Knowledge: (A) Page: 4 21 Which of the following are considered to be exporter strategies when the domestic (home market) currency is weak? a. conduct conventional cash-for-goods trade. b. engage in nonprice competition by improving quality, delivery, and aftersale service. c. improve productivity and engage in vigorous cost reduction. d. shift sourcing and manufacturing overseas. e. give priority to exports to relatively strongcurrency countries. Answer: (a) Difficulty: (3) Knowledge: (F) Page: 4 25, Exhibit 13-3 CHAPTER 14 In Spanish, five different words can be used for the word tires (cauchos, cubiertas, gomas, llantas, and neumaticos). Obviously, this might present problems in advertising. This would be an example of which of the following types of translation errors? a. simple carelessness. b. idioms. c. local slang. d. multiple-meaning words. e. incorrect grammar. Answer: (d) Difficulty: (1) Knowledge: (A) Page: 4 49 In an advertising message, the original slogan was Body by Fisher. The translation in a foreign market was Corpse by Fisher. This would be an example of which of the following constraints on international promotion? a. language barriers. b. advertising regulations.

c. cultural constraints. d. local attitudes toward advertising. e. poor media infrastructure. Answer: (a) Difficulty: (1) Knowledge: (A) Page: 4 49 As an illustration of a barrier to advertising standardization, Ray-Ban had to re-shoot a sunglasses commercial for Malaysia because the original version had Caucasian actors. In Malaysia, ads featuring Caucasians are not allowed. This example would be an example of which of the following barriers to standardization of international advertising? a. cultural differences. b. budget. c. advertising regulations. d. differences in the degree of market development. e. the Not Invented Here syndrome. Answer: (c) Difficulty: (2) Knowledge: (A) Page: 4 61 Sampling, price-offs, coupons, sweepstakes, bonus packs, and trade allowances are all examples of ____________. a. advertising b. sales promotion c. direct marketing d. public relations e. publicity Answer: (b) Difficulty: (2) Knowledge: (A) Page: 4 77 CHAPTER 15 - Personal Selling What is meant by power distance? How can it affect how people relate to each other in a personal selling situation? The form of selling that best describes the way that the majority of cars are sold in Japan is: a. at car lots or dealerships. b. via the Internet. c. by door-to-door salespeople. d. direct from the manufacturer. e. via used car lots. Answer: (c) Difficulty: (2) Knowledge: (A) Page: 4 85 . Selling through an Export Management Company (EMC) or an Export Trading Company (ETC) is considered a _______ involvement approach to international sales. a. low b. middle c. high d. backward e. parallel Answer: (a) Difficulty: (1) Knowledge: (F) Page: 4 88 Which of the following degrees of involvement would probably be in use when there is a traveling global sales force and high technology experts are used by the firm? a. limited foreign involvement and visibility b. local management and sales force c. expatriate management and local sales force (mixed) d. heavy to complete expatriate sales force e. maximum global control and world wide ownership

Answer: (d) Difficulty: (2) Knowledge: (A) Page: 4 89, Exhibit 15-2 . Based on Geert Hofstedes cultural dimensions scale, which of the following countries most likely scores high on the power distance scale? a. Japan b. United States c. Germany d. Australia e. Canada Answer: (a) Difficulty: (1) Knowledge: (A) Page: 4 94, Exhibit 15-3 Based on Geert Hofstedes cultural dimensions scale, which of the following countries most likely scores high on the individualism versus collectivism scale? a. Japan b. United States c. China d. Mexico e. Pakistan Answer: (b) Difficulty: (1) Knowledge: (A) Page: 4 94, Exhibit 15-3 Based on Geert Hofstedes cultural dimensions scale, which of the following countries most likely scores high on the long-term orientation scale? a. Hong Kong b. United States c. Great Britain d. Germany e. Pakistan Answer: (a) Difficulty: (2) Knowledge: (A) Page: 4 94, Exhibit 15-3 If a company attempted to integrate men and women in the sales force in Saudi Arabia, the company would have to deal with __________________ problems. a. focus b. vision c. mission d. corporate culture e. country culture Answer: (e) Difficulty: (1) Knowledge: (A) Page: 4 93-494 Setting sales force objectives internationally will not only depend on the company goals but will also depend on: a. the training procedures. b. the recruiting procedures. c. the evaluation procedures. d. an analysis of the culture and the values of the country it is entering. e. management standards for excellence. Answer: (d) Difficulty: (2) Knowledge: (F) Page: 4 97 Not all United States sales methods or systems can automatically be exported abroad. Considering the information provided by research on different cultural dimensions, why might it be difficult to adopt a U.S.style commission system for salespeople in such countries as Japan or Mexico. Be sure to remember how these two countries might rank on the five cultural dimension scales. CHAPTER 16 - Retailing and Distribution

Consider the KFC video that we viewed in class. Even though the video represents KFC's entrance into Japan several years ago, many of the same operating principles apply today with global firm's expansion into many new markets. Explain. 2. In our discussion of the Tricon Branding article, we learned that KFC has been the target of some protest actions following the September 11, 2001 events. KFC has 5,000 US restaurants and 6,000 abroad (Nov. 26, 2001), including stores in more than 80 countries. How can KFC's analysts use the notion of political risk to estimate such threats? http://www.prsgroup.com/ _______ is defined as the design and management of a system that directs and controls the flows of materials into, through and out of the firm across national boundaries to achieve its corporate objectives at a minimum total cost. a. Global goods flow b. Global distribution c. Global logistics d. Global wholesaling e. Global shipping Answer: (c) Difficulty: (2) Knowledge: (F) Page: 5 14 Multinational corporations can use _______________ as a strategic tool in dealing with currency fluctuations and as a hedge against inflation. a. buying power b. just-in-time management c. just-in-time delivery d. purchasing management e. inventory Answer: (e) Difficulty: (3) Knowledge: (F) Page: 5 19 When companies like Dell Computer and Chrysler (that rely heavily on components such as auto parts and computer chips) are able to take advantage of free trade zones, they usually do it by having: a. cheap parts sent to their manufacturing facility from abroad. b. their manufacturing facilities designated as subzones of an FTZ. c. buying cheap dumped products. d. creating gray markets. e. by passing customs because of being designated a security area. Answer: (b) Difficulty: (2) Knowledge: (A) Page: 52 9 CHAPTER 17 - EXPORTING 1. We considered numerous standard export forms in class. One is the "country of origin" form. Describe what this concept means and why it is so important in global trade. 2. As an aid to expanding information about world trade, increasingly, international marketing information is available in the form of _____________________. a. CD-ROMs. b. electronic encyclopedias. c. electronic databases. d. CIA reports. e. government intelligence reports.

Answer: (c) Difficulty: (2) Knowledge: (F) Page: 544 3. We used several electronic databases in class to research exporting laws, regulations, market research information, and documentation. Describe one of the databases and its usefulness to an exporter. 4. Conducting export research on China and Russia would best be done by: a. doing database research. b. doing on-line searches. c. doing field work. d. using existing government facts and figures. e. using data supplied by trade missions. Answer: (c) Difficulty: (2) Knowledge: (A) Page: 5 44 5. Explain Your Answer. When the exporter quotes a price for the goods, including charges for delivery of the goods alongside a vessel at a port (the seller covers all costs of unloading and wharfage at the shipment port and the buyer covers all other charges to get the goods to the buyer), this form of terms of shipment is called: a. ex-works. b. free alongside ship (FAS). c. free on board (FOB). d. cost and freight (CFR). e. Cost, Insurance, and Freight (CIF). Answer: (b) Difficulty: (3) Knowledge: (A) Page: 55 5 Exhibit 17-6 CHAPTER - E-COMMERCE 1. We looked at several barriers to e-commerce in various country settings. Name three and explain why they are barriers. 2. How can infrastructure affect individuals' likelihood of adopting Internet service? 3. One of the major limitations on consumer purchasing on the Internet is: a. Products are not available that they seek b. Prices are not acceptable on web site c. They often do not have a credit card to make their purchases d. Consumers always prefer to see products in person SANEX QUESTIONS: you many have a short case described on the final. Be prepared to Answer Questions similar to those used in the Sanex case Consider the Sanex case in the text. The product under consideration is a liquid hand soap. Here is a link to an online site so that you can see the product and some competitors. http://store.europe.yahoo.com/pharmacy2u-uk/personalcare-bath---shower-preparations-soaps---handwashliquid-soap.html 1. Following up on your new product Questionabout the research youd want to conduct, comment on the appropriateness of the research conducted for Sanex. If you were a product manager who could give the go ahead for the product, would you? How would you have designed the initial research? 2. Analyze this product in terms of product innovativeness and change concepts used in class. 3. Sanex was initially introduced with a Spanish theme. In moving to other markets, suppose that you were

considering whether any local market adaptations were necessary, such as those we discussed in your assignment (e.g. color, scent, etc). How would you determine their importance? 4. Suppose the product were under consideration for export to a lesser developed country where liquid handsoap is not known. How would you analyze the degree of behavioral change assumed by the product design? 5. The name Sanex was created in order to make this brand a Eurobrand, and later a global brand. Suppose that CVL could have acquired a local brand instead in Spain, such as Henkel or Nivea. What do you advise? 6. Lets just suppose that CVL acquired Ernopon and was attempting to determine whether to use fade in/fade out, transparent forewarning, summary axing, or a dual new brand plus local strategy. How would you analyze the situation and make recommendations? Please draw connections to our discussions of "Shark". 7. Sanex was initially priced as a premium product in Spain as a signal of high quality. The product was later taken to several other countries with great success, such France. Suppose that you were asked to investigate pricing strategies for the EU given the impending date for euro integration. 8. Suppose that you are considering bringing the product to India, but are concerned that the price is higher than the typical consumer might accept. You consider using a target price approach rather than a cost-based approach. Explain. 9. The promotion for the product needed to encode the message of healthy skin in a way that allowed consumers to decode the message accurately. One ad showed a woman kissing a mans armpit. Explain possible problems in terms of encoding and decoding. 10. Consumer education was used early in the process. Why? STARBUCKS CASE: 1. What type of brand positioning is Starbucks attempting to use? 2. Recent studies have identified Starbucks as a successful global brand. a. What is a global brand? Can you define it? b. Why can we consider Starbucks to be a global brand? 3. Starbucks took a way of doing business that was developed in the United States and has successfully brought that business format to other markets. Is their approach ethnocentric? Why or why not? ANHEUSER BUSCH CASE: 1. What model can we use to help AB management determine whether they should enter a certain market? 2. The spending power of consumers in many foreign markets is often reduced due to currency fluctuations. How could AC modify their marketing to maximize consumer value? 3. AB originally intended to utilize advertising developed for Hispanic markets in the United States. Would these be likely to communicate correctly to persons in AB's destination markets of Mexico and Brazil? Why or why not? Can you use the communications model to support your point? PEPSI ONE: 1. This product was introduced to other markets as

"PEPSI MAX." We have studied the importance of branding in a global context. Did Pepsi follow the correct strategy? 2. In choosing the name Pepsi One, the benefit of maximum taste is removed from the name as a benefit cue. Do you agree or disagree with this move? Explain. 3. Research needed to be carried out to determine whether gender is a relevant variable in the U.S. market and what attributes were the key drivers of product purchase. This must be done before new advertising can be designed. Discuss the type of research that you would recommend in order to Answer these major Questions. 4. Suppose we were going to use the communications model to analyze and diagnose U.S. consumers' reactions to ads for Pepsi One that are aimed at young adventurous men. We want to design a study testing women's reactions to the current series of ads using Cuba Gooding Jr. What type of information would we want to examine? 5. There were several major problems with using the European data to build a strategy for the U.S. market. Identify and discuss three of the problem areas. 6. We considered the "House of Quality" article in terms of the Pepsi One case.First, describe the major ideas in the articles. Next, suggest a possible analysis for Pepsi One using the frameworks that are proposed. WAL-MART 1. Suppose you were going to consult with WM in determining a site selection plan. You have studied information about how consumers shop in Brazil. What type of site might maximize your ability to meet consumer needs? 2. Consumers are known to buy in bulk in Brazil and to have their families accompany them in their shopping trips. There are several ways to buy in bulk: single large packages, multiple small packages, and so forth. Which method would you recommend for WM and why? 3. How does this case compare to the video shown regarding Kentucky Fried Chicken's entry into Japan? Suppose that you showed the KFC video to a group of managers for KFC's international division. What would you want them to learn? AOL 1. What is the difference betweeen the technology of AOL as a service and the appliance used to make it available? Did AOL take this into account? 2. Joint venture partners can help with acquiring market access if they are the "right" fit with a company's needs. Comment on the original AOL joint venture discussed in the case. 3. Suppose that you were consulting with AOL back at the time of their entry into Japan. Describe and defend three types of research that you would recommend. THE GAP 1. GAP has three different store formats at different levels of cost and quality. How can these formats be utilized when consumer spending power has been reduced? 2. Compare and contrast the market entry strategies chosen for Germany and Japan. 3. It is wise to work with an advertising agency in Germany in addressing potential regulations in that market. Why?

From another Question Bank with mistakes Question1 Multiple Choice 0 of 1 point(s) ______ received the smallest amount of inward FDI in 2001. Your Answer: The United States Correct Answer: Africa Feedback: Difficulty: MediumPage: 218 Question2 Multiple Choice 1 of 1 point(s) McDonalds has expanded into foreign markets primarily through Your Answer: franchising. Correct Answer: franchising. Feedback: Difficulty: MediumPage: 232 Question3 Multiple Choice 1 of 1 point(s) _______ foreign direct investment is FDI in the same industry as a firm operates in at home. Your Answer: Horizontal Correct Answer: Horizontal Feedback: Difficulty: MediumPage: 215 Question4 Multiple Choice 0 of 1 point(s) The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year). Your Answer: portfolio Correct Answer: flow Feedback: Difficulty: EasyPage: 215 Question5 True/False 0 of 1 point(s) The flow of FDI has not only accelerated over the last quarter century, but is also accelerated faster than the growth in world trade. Your Answer: false Correct Answer: true Feedback: Difficulty: MediumPage: 215 Question6 True/False 1 of 1 point(s) In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 221 Question7 Multiple Choice 0 of 1 point(s) The advantage claimed for licensing over FDI is that the licensor: Your Answer: does not have to pay taxes on royalty income Correct Answer: does not have to pay for opening a foreign market Feedback: Difficulty: MediumPage: 215 Question8 True/False 1 of 1 point(s) Governments are the main source of impediments to the free flow of products between nations. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 224 Question9 Multiple Choice 1 of 1 point(s)

The location-specific advantages argument association with John Dunning helps explain the _____ of FDI, both with regard to horizontal and vertical FDI. Your Answer: direction Correct Answer: direction Feedback: Difficulty: MediumPage: 231 Question10 True/False 1 of 1 point(s) Raymond Vernon, the originator of the product lifecycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 227 Question1 Multiple Choice 0 of 1 point(s) According to our textbook, _____ are the main source of impediments to the free flow of products between nations. Your Answer: individuals Correct Answer: governments Feedback: Difficulty: MediumPage: 224 Question2 Multiple Choice 1 of 1 point(s) One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries. Your Answer: F.T. Knickerbocker Correct Answer: F.T. Knickerbocker Feedback: Difficulty: MediumPage: 226 Question3 Multiple Choice 0 of 1 point(s) Firms undertake FDI at _______ is Raymond Vernon's view of foreign direct investment. Your Answer: early stages in their corporate histories Correct Answer: particular stages in the life cycle of a product they have pioneered Feedback: Difficulty: MediumPage: 227 Question4 Multiple Choice 0 of 1 point(s) If Siemens, a German firm, purchased a 20% interest in a manufacturing firm in the United States, Siemens would be engaging in Your Answer: cross-boarder international investment. Correct Answer: foreign direct investment. Feedback: Difficulty: MediumPage: 214 Question5 True/False 0 of 1 point(s) Since World War II, Great Britain has traditionally been by far the largest source country for FDI. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 220 Question6 Multiple Choice 0 of 1 point(s) ______ foreign direct investment is FDI in an industry that provides inputs for a firm's domestic operations, or it may be FDI in an industry abroad that sells the outputs of a firm's domestic operations.

Your Answer: Horizontal Correct Answer: Vertical Feedback: Difficulty: MediumPage: 215 Question7 True/False 0 of 1 point(s) A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Your Answer: false Correct Answer: true Feedback: Difficulty: MediumPage: 224 Question8 Multiple Choice 1 of 1 point(s) The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001. Your Answer: 70 Correct Answer: 70 Feedback: Difficulty: HardPage: 221 Question9 True/False 0 of 1 point(s) Foreign direct investment occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country. Your Answer: false Correct Answer: true Feedback: Difficulty: EasyPage: 214 Question10 True/False 0 of 1 point(s) There has been a rapid decrease in the total volume of FDI over the past 20 years. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 215 Question1 Multiple Choice 0 of 1 point(s) When Starbucks invested $10 million in Starbucks Coffee of Japan in 1996, it was engaging in: Your Answer: international capital investment Correct Answer: foreign direct investment Feedback: Difficulty: MediumPage: 213 Question2 Multiple Choice 0 of 1 point(s) The ______ of FDI refers to the total accumulated value of foreign-owned assets at a given time. Your Answer: selection Correct Answer: stock Feedback: Difficulty: EasyPage: 215 Question3 Multiple Choice 0 of 1 point(s) The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year). Your Answer: stock Correct Answer: flow Feedback: Difficulty: EasyPage: 215 Question4 Multiple Choice 0 of 1 point(s) ________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes. Your Answer: Forward horizontal Correct Answer: Forward vertical Feedback: Difficulty: MediumPage: 229

Question5 Multiple Choice 0 of 1 point(s) If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of _________ Your Answer: multinational investment. Correct Answer: foreign direct investment. Feedback: Difficulty: MediumPage: 214 Question6 True/False 0 of 1 point(s) FDI is growing more rapidly than world trade but not more rapidly than world output. Your Answer: true Correct Answer: false Feedback: Difficulty: HardPage: 215 Question7 Multiple Choice 0 of 1 point(s) The investment by individuals, firms, or public bodies in foreign financial instruments is referred to as: Your Answer: foreign direct investment Correct Answer: foreign portfolio investment Feedback: Difficulty: MediumPage: 214 Question8 True/False 1 of 1 point(s) The high level of FDI outflows from the U.S. has been driven by a combination of factors including a strong U.S. economy; strong corporate profits and cash flow; and a relatively strong currency. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 221 Question9 True/False 0 of 1 point(s) Foreign portfolio investment involves taking a significant equity stake in a foreign business entity. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 214 Question10 Multiple Choice 0 of 1 point(s) FDI is growing more rapidly than: Your Answer: world output but not world trade Correct Answer: world trade and world output Feedback: Difficulty: MediumPage: 215 Question1 True/False 0 of 1 point(s) Since World War II, Great Britain has traditionally been by far the largest source country for FDI. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 220 Question2 Multiple Choice 0 of 1 point(s) The licensor _______ in return for licensing one of its products to a foreign firm. Your Answer: gets a special subsidy from the country of the licensee Correct Answer: collects a royalty fee on every unit the licensee sells Feedback: Difficulty: MediumPage: 215 Question3 Multiple Choice 1 of 1 point(s)

McDonalds has expanded into foreign markets primarily through Your Answer: franchising. Correct Answer: franchising. Feedback: Difficulty: MediumPage: 232 Question4 True/False 1 of 1 point(s) Externalities are knowledge spillovers that occur when companies in the same industry locate in the same area. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 228 Question5 Multiple Choice 0 of 1 point(s) When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____ occurs. Your Answer: reciprocal foreign investment Correct Answer: foreign direct investment Feedback: Difficulty: EasyPage: 214 Question6 Multiple Choice 0 of 1 point(s) Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____. Your Answer: FDI, exporting and licensing Correct Answer: exporting, FDI and licensing Feedback: Difficulty: MediumPage: 224 Question7 Multiple Choice 0 of 1 point(s) According to our textbook, _____ are the main source of impediments to the free flow of products between nations. Your Answer: special interest groups Correct Answer: governments Feedback: Difficulty: MediumPage: 224 Question8 True/False 1 of 1 point(s) In general, foreign direct investment is less expensive and less risky than either licensing or exporting. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 223 Question9 True/False 0 of 1 point(s) Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered. Your Answer: false Correct Answer: true Feedback: Difficulty: MediumPage: 227 Question10 True/False 1 of 1 point(s) The establishment of a wholly new operation in a foreign country is referred to as a green-field investment. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 214 Question1 Multiple Choice 0 of 1 point(s) Firms undertake FDI at _______ is Raymond Vernon's view of foreign direct investment. Your Answer: late stages in their corporate histories

Correct Answer: particular stages in the life cycle of a product they have pioneered Feedback: Difficulty: MediumPage: 227

Question2 True/False 1 of 1 point(s) A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 224

Question3

Multiple Choice 0 of 1 point(s)

Camelot Baby Carriages decided to enter the European market. Sam's Strollers followed to ensure that Camelot would not gain competitive advantage in Europe that could lead to the same thing occurring in Asia. Sam's then decides to enter the Australian market, and Camelot follows. This is an example of: Your Answer: monopoint competition. Correct Answer: multipoint competition. Feedback: Difficulty: MediumPage: 227 Question4 Multiple Choice 1 of 1 point(s) A(n) _______ is a company that conducts business in more than one country. Your Answer: multinational enterprise Correct Answer: multinational enterprise Feedback: Difficulty: EasyPage: 214 Question5 True/False 0 of 1 point(s) FDI is growing more rapidly than world trade but not more rapidly than world output. Your Answer: true Correct Answer: false Feedback: Difficulty: HardPage: 215 Question6 Multiple Choice 1 of 1 point(s) When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____ occurs. Your Answer: foreign direct investment Correct Answer: foreign direct investment Feedback: Difficulty: EasyPage: 214 Question7 Multiple Choice 0 of 1 point(s) Vertical FDI takes two forms. These are: Your Answer: upward vertical FDI and downward vertical FDI Correct Answer: backward vertical FDI and forward vertical FDI Feedback: Difficulty: MediumPage: 229 Question8 Multiple Choice 1 of 1 point(s)

Once a firm undertakes FDI, it becomes a(n) Your Answer: multinational enterprise. Correct Answer: multinational enterprise. Feedback: Difficulty: EasyPage: 214 Question9 True/False 0 of 1 point(s) The eclectic paradigm has come under sharp criticism by British economist John Dunning. Your Answer: true Correct Answer: false Feedback: Difficulty: HardPage: 228 Question10 True/False 1 of 1 point(s) Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 227 Question1 Multiple Choice 0 of 1 point(s) One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries. Your Answer: Michael Porter Correct Answer: F.T. Knickerbocker Feedback: Difficulty: MediumPage: 226 Question2 Multiple Choice 1 of 1 point(s) When two or more enterprises encounter each other in different regional markets, national markets, or industries, _______ arises. Your Answer: multipoint competition Correct Answer: multipoint competition Feedback: Difficulty: MediumPage: 227 Question3 Multiple Choice 1 of 1 point(s) If 3M, an American firm, produces adhesive tape in St. Paul, Minnesota, and ships the tape to South Korea to be sold, that is an example of: Your Answer: exporting. Correct Answer: exporting. Feedback: Difficulty: EasyPage: 223 Question4 Multiple Choice 1 of 1 point(s) McDonalds has expanded into foreign markets primarily through Your Answer: franchising. Correct Answer: franchising. Feedback: Difficulty: MediumPage: 232 Question5 True/False 1 of 1 point(s) The establishment of a wholly new operation in a foreign country is referred to as a green-field investment. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 214 Question6 Multiple Choice 1 of 1 point(s) The source of FDI by country remains highly concentrated, with the largest six countries accounting

for about _____ percent of all foreign direct investments outflows in 2001. Your Answer: 70 Correct Answer: 70 Feedback: Difficulty: HardPage: 221 Question7 Multiple Choice 1 of 1 point(s) An industry composed of a limited number of large firms (i.e. an industry in which four firm's control 80 percent of a domestic market) is referred to as a(n): Your Answer: oligopoly. Correct Answer: oligopoly. Feedback: Difficulty: EasyPage: 226 Question8 Multiple Choice 0 of 1 point(s) The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year). Your Answer: portfolio Correct Answer: flow Feedback: Difficulty: EasyPage: 215 Question9 Multiple Choice 0 of 1 point(s) With regard to horizontal FDI, market imperfections arise in two circumstances. These are: Your Answer: when tariff rates are high, and when import quotas are restrictive Correct Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how Feedback: Difficulty: HardPage: 224 Question10 True/False 1 of 1 point(s) FDI is growing more rapidly than world trade but not more rapidly than world output. Your Answer: false Correct Answer: false Feedback: Difficulty: HardPage: 215 Name: Quiz 4: Chapter 6 Status: Completed Score: 4 out of 10 point(s) Time Elapsed: 6 minutes and 53 seconds out of 10 minutes allowed. Instructions: Question1 Multiple Choice 1 of 1 point(s) An industry composed of a limited number of large firms (i.e. an industry in which four firm's control 80 percent of a domestic market) is referred to as a(n): Your Answer: oligopoly. Correct Answer: oligopoly. Feedback: Difficulty: EasyPage: 226 Question2 Multiple Choice 0 of 1 point(s) The investment by individuals, firms, or public bodies in foreign financial instruments is referred to as: Your Answer: foreign direct investment Correct Answer: foreign portfolio investment Feedback: Difficulty: MediumPage: 214 Question3 True/False 0 of 1 point(s)

Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive. Your Answer: false Correct Answer: true Feedback: Difficulty: MediumPage: 223 Question4 True/False 0 of 1 point(s) In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 221 Question5 True/False 1 of 1 point(s) There has been a rapid decrease in the total volume of FDI over the past 20 years. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 215

Question6 Multiple Choice 0 of 1 point(s) __________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes. Your Answer: Forward horizontal Correct Answer: Forward vertical Feedback: Difficulty: MediumPage: 229 Question7 True/False 0 of 1 point(s) Once a firm undertakes FDI for more than two years, it becomes a multinational enterprise. Your Answer: true Correct Answer: false Feedback: Difficulty: EasyPage: 214 Question8 Multiple Choice 1 of 1 point(s) 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? Your Answer: Licensing Correct Answer: Licensing Feedback: Difficulty: EasyPage: 215 Question9 Multiple Choice 0 of 1 point(s) The ______ approach points to the importance of investments in specialized assets and imperfections in the market for know-how as factors that increase the relative attractiveness of vertical FDI. Your Answer: location-specific advantages Correct Answer: market imperfections Feedback: Difficulty: HardPage: 233 Question10 True/False 1 of 1 point(s) A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries,

producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost. Your Answer: true Correct Answer: true Feedback: Difficulty: HardPage: 225 Question1 True/False 0 of 1 point(s) In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 221 Question2 Multiple Choice 1 of 1 point(s) FDI takes on two main forms. They are: Your Answer: green-field investments and acquiring or merging with an existing firm Correct Answer: green-field investments and acquiring or merging with an existing firm Feedback: Difficulty: MediumPage: 214 Question3 True/False 1 of 1 point(s) Most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the others' markets. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 217 Question4 Multiple Choice 0 of 1 point(s) Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____. Your Answer: exporting and licensing, FDI Correct Answer: exporting, FDI and licensing Feedback: Difficulty: MediumPage: 224 Question5 True/False 1 of 1 point(s) Recently, FDI inflows into the world's developing nations have been on the decline. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 217 Question6 Multiple Choice 1 of 1 point(s) A(n) _______ is a company that conducts business in more than one country. Your Answer: multinational enterprise Correct Answer: multinational enterprise Feedback: Difficulty: EasyPage: 214 Question7 Multiple Choice 0 of 1 point(s) According to the textbook, a firm will favor ______ over _____ when it wishes to maintain control over its technological know-how, or over its operations and business strategy. Your Answer: foreign direct investment, exporting Correct Answer: foreign direct investment, licensing Feedback: Difficulty: HardPage: 225

Question8 True/False 1 of 1 point(s) The flow of FDI has not only accelerated over the last quarter century, but is also accelerated faster than the growth in world trade. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 215 Question9 Multiple Choice 0 of 1 point(s) Historically, most FDI has been directed at the ______ nations of the world as firms based in advanced countries invested in _______. Your Answer: underdeveloped, each other's markets Correct Answer: developed, each other's markets Feedback: Difficulty: HardPage: 217 Question10 True/False 1 of 1 point(s) Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 227 Question1 True/False 1 of 1 point(s) Raymond Vernon, the originator of the product life-cycle theory, has argued that firms undertake FDI at particular stages in the life cycle of a product they have pioneered. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 227 Question2 Multiple Choice 1 of 1 point(s) Dunning argues that combining location specific assets or resource endowments and the firm's own unique capabilities often requires: Your Answer: FDI. Correct Answer: FDI. Feedback: Difficulty: MediumPage: 228 Question3 Multiple Choice 0 of 1 point(s) According to economic theory, there are three reasons the market does not always work well as a mechanism for selling know-how. Which of the following is not one of these reasons? Your Answer: A firm's know-how may not be amenable to licensing Correct Answer: Uncertainties in tariff rates make licensing unattractive, particularly if tariff rates go up Feedback: Difficulty: HardPage: 224-225 Question4 Multiple Choice 1 of 1 point(s) One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries. Your Answer: F.T. Knickerbocker Correct Answer: F.T. Knickerbocker Feedback: Difficulty: MediumPage: 226

Question5 Multiple Choice 1 of 1 point(s) If Siemens, a German firm, purchased a 20% interest in a manufacturing firm in the United States, Siemens would be engaging in Your Answer: foreign direct investment. Correct Answer: foreign direct investment. Feedback: Difficulty: MediumPage: 214 Question6 Multiple Choice 1 of 1 point(s) When two or more enterprises encounter each other in different regional markets, national markets, or industries, _______ arises. Your Answer: multipoint competition Correct Answer: multipoint competition Feedback: Difficulty: MediumPage: 227 Question7 Multiple Choice 1 of 1 point(s) _________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes. Your Answer: Forward vertical Correct Answer: Forward vertical Feedback: Difficulty: MediumPage: 229 Question8 True/False 1 of 1 point(s) A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 224 Question9 True/False 1 of 1 point(s) A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost. Your Answer: true Correct Answer: true Feedback: Difficulty: HardPage: 225 Question10 Multiple Choice 1 of 1 point(s) An industry composed of a limited number of large firms (i.e. an industry in which four firm's control 80 percent of a domestic market) is referred to as a(n): Your Answer: oligopoly. Correct Answer: oligopoly. Feedback: Difficulty: EasyPage: 226 Question1 Multiple Choice 1 of 1 point(s) _____ received the smallest amount of inward FDI in 2001. Your Answer: Africa Correct Answer: Africa Feedback: Difficulty: MediumPage: 218 Question2 True/False 1 of 1 point(s) Thirty years ago, Starbucks was a single store. Today, it is a global roaster and retailer of coffee with over 3,500 stores, more than 310 of which are located in Japan. Your Answer: true

Correct Answer: true Feedback: Difficulty: MediumPage: 213 Question3 Multiple Choice 1 of 1 point(s) The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001. Your Answer: 70 Correct Answer: 70 Feedback: Difficulty: HardPage: 221 Question4 True/False 0 of 1 point(s) The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time. Your Answer: true Correct Answer: false Feedback: Difficulty: EasyPage: 215 Question5 Multiple Choice 1 of 1 point(s) The flow of foreign direct investment out of a country is Your Answer: outflow of FDI. Correct Answer: outflow of FDI. Feedback: Difficulty: EasyPage: 215 Question6 Multiple Choice 1 of 1 point(s) One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries. Your Answer: F.T. Knickerbocker Correct Answer: F.T. Knickerbocker Feedback: Difficulty: MediumPage: 226 Question7 Multiple Choice 1 of 1 point(s) FDI takes on two main forms. They are: Your Answer: green-field investments and acquiring or merging with an existing firm Correct Answer: green-field investments and acquiring or merging with an existing firm Feedback: Difficulty: MediumPage: 214 Question8 Multiple Choice 1 of 1 point(s) Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____. Your Answer: exporting, FDI and licensing Correct Answer: exporting, FDI and licensing Feedback: Difficulty: MediumPage: 224 Question9 Multiple Choice 1 of 1 point(s) The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year). Your Answer: flow Correct Answer: flow Feedback: Difficulty: EasyPage: 215 Question10 Multiple Choice 1 of 1 point(s) With regard to horizontal FDI, market imperfections arise in two circumstances. These are: Your Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how

Correct Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how Feedback: Difficulty: HardPage: 224 Question1 Multiple Choice 1 of 1 point(s) FDI takes on two main forms. They are: Your Answer: green-field investments and acquiring or merging with an existing firm Correct Answer: green-field investments and acquiring or merging with an existing firm Feedback: Difficulty: MediumPage: 214 Question2 Multiple Choice 1 of 1 point(s) The _____ of FDI refers to the total amount of FDI undertaken over a given time period (normally a year). Your Answer: flow Correct Answer: flow Feedback: Difficulty: EasyPage: 215 Question3 True/False 1 of 1 point(s) In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 221 Question4 Multiple Choice 1 of 1 point(s) Once a firm undertakes FDI, it becomes a(n) Your Answer: multinational enterprise. Correct Answer: multinational enterprise. Feedback: Difficulty: EasyPage: 214 Question5 Multiple Choice 1 of 1 point(s) The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001. Your Answer: 70 Correct Answer: 70 Feedback: Difficulty: HardPage: 221 Question6 True/False 1 of 1 point(s) Vertical foreign direct investment is FDI in an industry that provides inputs for a firm's domestic operations, or it may be FDI in an industry abroad that sells the outputs of a firm's domestic operations. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 215 Question7 True/False 1 of 1 point(s) The high level of FDI outflows from the U.S. has been driven by a combination of factors including a strong U.S. economy; strong corporate profits and cash flow; and a relatively strong currency. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 221 Question8 True/False 1 of 1 point(s)

Recently, FDI inflows into the world's developing nations have been on the decline. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 217 Question9 Multiple Choice 0 of 1 point(s) Which of the following factors is not one of the factors identified in the textbook that alters the relative attractiveness of exporting, licensing, and FDI? Your Answer: Strategic behavior Correct Answer: Tax implications Feedback: Difficulty: MediumPage: 224-226 Question10 Multiple Choice 1 of 1 point(s) The flow of foreign direct investment into a country is referred to as the Your Answer: inflow of FDI. Correct Answer: inflow of FDI. Feedback: Difficulty: EasyPage: 215 Question1 True/False 1 of 1 point(s) Most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the others' markets. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 217 Question2 True/False 1 of 1 point(s) There has been a rapid decrease in the total volume of FDI over the past 20 years. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 215 Question3 Multiple Choice 1 of 1 point(s) _____ are factors that inhibit markets from working perfectly. Your Answer: Market imperfections Correct Answer: Market imperfections Feedback: Difficulty: MediumPage: 224 Question4 Multiple Choice 1 of 1 point(s) Once a firm undertakes FDI, it becomes a(n) Your Answer: multinational enterprise. Correct Answer: multinational enterprise. Feedback: Difficulty: EasyPage: 214 Question5 Multiple Choice 1 of 1 point(s) With regard to horizontal FDI, market imperfections arise in two circumstances. These are: Your Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how Correct Answer: when there are impediments to the free flow of products between nations, and when there are impediments to the sale of know-how Feedback: Difficulty: HardPage: 224 Question6 Multiple Choice 1 of 1 point(s)

If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of Your Answer: foreign direct investment. Correct Answer: foreign direct investment. Feedback: Difficulty: MediumPage: 214 Question7 Multiple Choice 1 of 1 point(s) Vertical FDI takes two forms. These are: Your Answer: backward vertical FDI and forward vertical FDI Correct Answer: backward vertical FDI and forward vertical FDI Feedback: Difficulty: MediumPage: 229 Question8 True/False 1 of 1 point(s) The stock of foreign direct investment refers to the total accumulated value of foreign-owned assets at a given time. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 215 Question9 Multiple Choice 0 of 1 point(s) According to ______, firms undertake FDI to exploit resource endowments or assets that are location specific. Your Answer: Porter Correct Answer: Dunning Feedback: Difficulty: MediumPage: 228 Question10 True/False 1 of 1 point(s) The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time. Your Answer: false Correct Answer: false Feedback: Difficulty: EasyPage: 215 Question1 Multiple Choice 1 of 1 point(s) The flow of foreign direct investment out of a country is Your Answer: outflow of FDI. Correct Answer: outflow of FDI. Feedback: Difficulty: EasyPage: 215 Question2 Multiple Choice 0 of 1 point(s) The ______ of FDI refers to the total accumulated value of foreign-owned assets at a given time. Your Answer: flow Correct Answer: stock Feedback: Difficulty: EasyPage: 215 Question3 Multiple Choice 1 of 1 point(s) When Starbucks invested $10 million in Starbucks Coffee of Japan in 1996, it was engaging in: Your Answer: foreign direct investment Correct Answer: foreign direct investment Feedback: Difficulty: MediumPage: 213 Question4 True/False 1 of 1 point(s) In general, foreign direct investment is less expensive and less risky than either licensing or exporting. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 223

Question5 True/False 1 of 1 point(s) Recently, FDI inflows into the world's developing nations have been on the decline. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 217 Question6 True/False 1 of 1 point(s) Gross fixed capital formation summarizes the total amount of capital invested in factories, stores, office buildings, and the like. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 219 Question7 Multiple Choice 1 of 1 point(s) Once a firm undertakes FDI, it becomes a(n) Your Answer: multinational enterprise. Correct Answer: multinational enterprise. Feedback: Difficulty: EasyPage: 214 Question8 Multiple Choice 1 of 1 point(s) Which of the following factors is not one of the factors identified in the textbook that alters the relative attractiveness of exporting, licensing, and FDI? Your Answer: Tax implications Correct Answer: Tax implications Feedback: Difficulty: MediumPage: 224-226 Question9 Multiple Choice 0 of 1 point(s) According to economic theory, there are three reasons the market does not always work well as a mechanism for selling know-how. Which of the following is not one of these reasons? Your Answer: Licensing does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to profitably exploit its advantage in know-how Correct Answer: Uncertainties in tariff rates make licensing unattractive, particularly if tariff rates go up Feedback: Difficulty: HardPage: 224-225 Question10 Multiple Choice 1 of 1 point(s) One theory used to explain foreign direct investment patterns is based on the idea that firms follow their domestic competitors overseas. First expounded by __________, this theory has been developed with regard to oligopolistic industries. Your Answer: F.T. Knickerbocker Correct Answer: F.T. Knickerbocker Feedback: Difficulty: MediumPage: 226 Question1 Multiple Choice 1 of 1 point(s) The total amount of capital invested in factories, stores, office buildings, and the like is summarized by: Your Answer: gross fixed capital formation Correct Answer: gross fixed capital formation Feedback: Difficulty: MediumPage: 219 Question2 True/False 1 of 1 point(s) F.T. Knickerbocker looked at the relationship between FDI and rivalry in oligopolistic industries.

Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 226 Question3 True/False 1 of 1 point(s) The flow of FDI refers to the total accumulated value of foreign-owned assets at any given time. Your Answer: false Correct Answer: false Feedback: Difficulty: EasyPage: 215 Question4 Multiple Choice 1 of 1 point(s) Although it normally involves much longer-term commitments, franchising is essentially the service industry version of: Your Answer: licensing. Correct Answer: licensing. Feedback: Difficulty: MediumPage: 232 Question5 True/False 1 of 1 point(s) Gross fixed capital formation summarizes the total amount of capital invested in factories, stores, office buildings, and the like. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 219 Question6 True/False 1 of 1 point(s) The establishment of a wholly new operation in a foreign country is referred to as a green-field investment. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 214 Question7 Multiple Choice 0 of 1 point(s) According to internalization theory, licensing has three major drawbacks as a strategy for exploiting foreign market opportunities. Each of the following is a drawback of licensing except: Your Answer: licensing does not give a firm the tight control over manufacturing, marketing, and strategy in a foreign country that may be required to maximize its profitability. Correct Answer: licensing helps a firm avoid making a direct foreign investment in a foreign country. Feedback: Difficulty: HardPage: 224-226 Question8 True/False 1 of 1 point(s) The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time. Your Answer: false Correct Answer: false Feedback: Difficulty: EasyPage: 215 Question9 Multiple Choice 1 of 1 point(s) Which of the following factors is not one of the factors identified in the textbook that alters the relative attractiveness of exporting, licensing, and FDI? Your Answer: Tax implications Correct Answer: Tax implications Feedback: Difficulty: MediumPage: 224-226 Question10 True/False 1 of 1 point(s)

Because a firm must establish production facilities in a foreign country or acquire a foreign enterprise, FDI is expensive. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 223 Question1 Multiple Choice 1 of 1 point(s) If General Electric, a U.S. based corporation, purchased a 50% interest in a company in Italy, that purchase would be an example of Your Answer: foreign direct investment. Correct Answer: foreign direct investment. Feedback: Difficulty: MediumPage: 214 Question2 True/False 1 of 1 point(s) A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost. Your Answer: true Correct Answer: true Feedback: Difficulty: HardPage: 225 Question3 Multiple Choice 1 of 1 point(s) When _______, a firm will favor FDI over exporting as an entry strategy, according to the textbook. Your Answer: transportation costs or trade barriers make exporting unattractive Correct Answer: transportation costs or trade barriers make exporting unattractive Feedback: Difficulty: HardPage: 224 Question4 True/False 0 of 1 point(s) In the context of the form of FDI, the data suggests the majority of cross-border investment is in the form of green-field investments rather than in the form of mergers and acquisitions. Your Answer: true Correct Answer: false Feedback: Difficulty: MediumPage: 221 Question5 Multiple Choice 1 of 1 point(s) When a firm invests directly in new facilities to produce and/or market a product in a foreign country, _____ occurs. Your Answer: foreign direct investment Correct Answer: foreign direct investment Feedback: Difficulty: EasyPage: 214 Question6 Multiple Choice 0 of 1 point(s) In the international business literature, the marketing imperfection approach to FDI is typically referred to as: Your Answer: international commerce theory Correct Answer: internalization theory Feedback: Difficulty: MediumPage: 224 Question7 True/False 1 of 1 point(s) Once a firm undertakes FDI for more than two years, it becomes a multinational enterprise.

Your Answer: false Correct Answer: false Feedback: Difficulty: EasyPage: 214 Question8 True/False 1 of 1 point(s) Most FDI has been directed at the developed nations of the world as firms based in advanced countries invested in the others' markets. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 217 Question9 Multiple Choice 1 of 1 point(s) __________ FDI is FDI into an industry abroad that sells the outputs of a firm's domestic production processes. Your Answer: Forward vertical Correct Answer: Forward vertical Feedback: Difficulty: MediumPage: 229 Question10 Multiple Choice 1 of 1 point(s) Impediments to the free flow of products between nations decrease the profitability of ______, relative to _____. Your Answer: exporting, FDI and licensing Correct Answer: exporting, FDI and licensing Feedback: Difficulty: MediumPage: 224 Question1 Multiple Choice 0 of 1 point(s) The investment by individuals, firms, or public bodies in foreign financial instruments is referred to as: Your Answer: foreign indirect investment Correct Answer: foreign portfolio investment Feedback: Difficulty: MediumPage: 214 Question2 Multiple Choice 1 of 1 point(s) The eclectic paradigm has been championed by the British economist __________. Your Answer: John Dunning Correct Answer: John Dunning Feedback: Difficulty: MediumPage: 228 Question3 True/False 1 of 1 point(s) A rationale for wanting control over the operations of a foreign entity is that the firm might wish to take advantage of differences in factor costs across countries, producing only part of its final product in a given country, while importing other parts from where they can be produced at a lower cost. Your Answer: true Correct Answer: true Feedback: Difficulty: HardPage: 225 Question4 True/False 1 of 1 point(s) Since World War II, Great Britain has traditionally been by far the largest source country for FDI. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 220 Question5 True/False 1 of 1 point(s) Foreign direct investment occurs when a firm invests directly in facilities to produce and/or market a product in a foreign country. Your Answer: true

Correct Answer: true Feedback: Difficulty: EasyPage: 214 Question6 Multiple Choice 1 of 1 point(s) According to the textbook, a firm will favor ______ over _____ when it wishes to maintain control over its technological know-how, or over its operations and business strategy. Your Answer: foreign direct investment, licensing Correct Answer: foreign direct investment, licensing Feedback: Difficulty: HardPage: 225 Question7 True/False 1 of 1 point(s) A firm will favor foreign direct investment over exporting as an entry strategy when transportation costs or trade barriers make exporting unattractive. Your Answer: true Correct Answer: true Feedback: Difficulty: MediumPage: 224 Question8 Multiple Choice 1 of 1 point(s) FDI is growing more rapidly than: Your Answer: world trade and world output Correct Answer: world trade and world output Feedback: Difficulty: MediumPage: 215 Question9 Multiple Choice 1 of 1 point(s) According to our textbook, _____ are the main source of impediments to the free flow of products between nations. Your Answer: governments Correct Answer: governments Feedback: Difficulty: MediumPage: 224 Question10 True/False 1 of 1 point(s) The eclectic paradigm is a theory of FDI that combines two other perspectives into a single holistic explanation of FDI. Your Answer: true Correct Answer: true Feedback: Difficulty: HardPage: 228 Question1 Multiple Choice 1 of 1 point(s) When Starbucks invested $10 million in Starbucks Coffee of Japan in 1996, it was engaging in: Your Answer: foreign direct investment Correct Answer: foreign direct investment Feedback: Difficulty: MediumPage: 213 Question2 Multiple Choice 1 of 1 point(s) High transportation costs and/or tariffs imposed on imports help explain why many firms prefer ______ over ______. Your Answer: foreign direct investment or licensing, exporting Correct Answer: foreign direct investment or licensing, exporting Feedback: Difficulty: HardPage: 224 Question3 Multiple Choice 1 of 1 point(s)

FDI is an acronym that stands for Your Answer: Foreign Direct Investment. Correct Answer: Foreign Direct Investment. Feedback: Difficulty: EasyPage: 214 Question4 True/False 1 of 1 point(s) The flow of foreign investment refers to the number of countries a firm is investing in at any given point in time. Your Answer: false Correct Answer: false Feedback: Difficulty: EasyPage: 215 Question5 Multiple Choice 1 of 1 point(s) The ______ approach points to the importance of investments in specialized assets and imperfections in the market for know-how as factors that increase the relative attractiveness of vertical FDI. Your Answer: market imperfections Correct Answer: market imperfections Feedback: Difficulty: HardPage: 233 Question6 Multiple Choice 0 of 1 point(s) Historically, most backward vertical FDI has been in: Your Answer: services industries Correct Answer: extractive industries Feedback: Difficulty: MediumPage: 229 Question7 Multiple Choice 0 of 1 point(s) The source of FDI by country remains highly concentrated, with the largest six countries accounting for about _____ percent of all foreign direct investments outflows in 2001. Your Answer: 60 Correct Answer: 70 Feedback: Difficulty: HardPage: 221 Question8 True/False 1 of 1 point(s) Foreign portfolio investment involves taking a significant equity stake in a foreign business entity. Your Answer: false Correct Answer: false Feedback: Difficulty: MediumPage: 214 Question9 Multiple Choice 1 of 1 point(s) When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance. This is particularly true of products that have a(n) Your Answer: low value-to-weight ratio. Correct Answer: low value-to-weight ratio. Feedback: Difficulty: HardPage: 224 Question10 Multiple Choice 1 of 1 point(s) When two or more enterprises encounter each other in different regional markets, national markets, or industries, _______ arises. Your Answer: multipoint competition Correct Answer: multipoint competition Feedback: Difficulty: MediumPage: 227