Review Questions for Final Exam November 2013

1. Discuss why much of the recent increase in FDI is being driven by the dramatic political and economic changes that have been occurring in many of the world's developing nations.
a. These countries are now open to FDI and companies in places that are developed want to go to places people don’t have all the products or as many of the product they sell.

2. Exporting is an attractive option for products that have a low value-to-weight ratio. Explain why it is or it is not the case.
a. They will cost more to ship then you will get in profit. In favor of less weight and more value. That is why the export pieces of items instead of the whole thing.

3. Despite its advantages, FDI …show more content…

Emerging economies that are trying to develop and want help to be treated more fairly because they can afford to buy things they need.

15. Briefly describe the roles of the World Bank and of the IMF.
a. IMF – under European management
b. World Bank – under American management

16. One advantage to exporting is that it avoids the costs of establishing manufacturing operations in the host country. Why do all companies not resort to exporting then?
a. Due to tariffs it can be more cost efficient for a country to not export, some goods are not accepted into countries, some countries don’t allow exports, the currencies and the countertrade idea, governmental bands of some countries exports, belief that country wont respect their agreements

17. What are the differences, advantages and disadvantages of Franchising over licensing?
a. Difference is that franchising tends to involve longer-term commitments then licensing
b. Franchising- : Advan – relieved of many costs and risks and can build a global presence quickly. Disadvan – quality control
c. Licensing- : Advan – does not bear the development costs and risks, firms with less capital to develop overseas does not want to develop business applications of intangible property, companies prohibited from going into foreign markets by barriers to investment, Disadvan – does not give firm the tight control over manuf. Marketing and strategy that is required for realizing the experience curve and