Question

Can anyone answer the question and explain it thx alot

8. Foreign direct investment would be the acquisition abroad by the MNC of a) sales offices b) distribution channels c) plant and equipment d) portfolio securities 9. The most important element in determining whether and how a firm should expand overseas is a) the degree of government subsidies and protection provided b) whether the firm's competitive advantages can be transferred abroad and how this can best be done c) the correlation between the domestic and world economies d) the extent of political risk overseas 10. The choice of whether to sell abroad by exporting, licensing foreign producers, or manufacturing abroad depends on all of the following EXCEPT a) the nature of government regulations b) whether the firm's competitive advantage can be transferred abroad in the products it sells or can be written down and clearly transmitted c) whether customers are looking for some signals as to the firm's commitment to the local market d) transfer pricing policies of the parent MNC

Answer 1

C) Acquiring plant and equipment (Ctrl) - A foreign direct investment (FDI) is an investment by MNC or individual in one country into business interests located in another country. FDI results in establishing foreign business operations or acquiring foreign business assets in a foreign company. FDIS are distinguished from portfolio investments in which an investor purchases equities of foreign-based companies. Hence 4th option is wrong. When a business makes a foreign direct investment, it establishes either effective control or substantial influence over the decision-making process of the business or the operation. Hence, acquiring sales office and distribution channel shall not give effective control or substantial influence over the decision-making process of the business. Hence, 1st and 2nd option is wrong. Acquiring plant and equipment shall give effective control or substantial influence over the decision-making process of the business. Hence, 3rd option is right.