What is the Knickerbocker theory?

Knickerbocker’s theory suggests that firms imitate other firms in oligopolistic industries, and will follow the leader in undertaking FDI in certain countries, as sort of strategic defensive moves.

What is the term that describes when two or more enterprises encounter each other in different regional markets national markets or industries?

Multipoint competition arises when two or more enterprises encounter each other in different regional markets, national markets, or industries.

Which of the following arises when a country is importing more goods and services than it is exporting?

trade deficit A trade deficit is an economic condition that occurs when a country is importing more goods than it is exporting. The trade deficit is calculated by taking the value of goods being imported and subtracting it by the value of goods being exported.

Which theory tries to explain why companies often prefer FDI over licensing as a strategy to enter foreign markets?

A branch of economic theory known as internalization theory seeks to explain why firms often prefer foreign direct investment over licensing as a strategy for entering foreign markets (this approach is also known as the market imperfections approach).

What is the internationalization theory?

The Internationalization theory of the MNC is concerned with entry mode choices in single markets based on transaction cost analysis. … Three most popular internationalization theories are Uppsala model, Network approach and international New Ventures or also known as Born Global.

What is oligopolistic reaction theory?

An oligopolistic reaction is a concept from economics introduced by Frederick T. Knickerbocker (Oligopolistic Reaction and Multinational Enterprise, Cambridge, MA: Harvard University Press, 1973) to explain why firms follow rivals into foreign markets.

What is internalization theory quizlet?

Internalization theory (FDI Thoery) There is a branch of economic theory known as internalization theory (also known as the market imperfections approach) that seeks to explain why firms often prefer foreign direct investment to licensing as a strategy for entering foreign markets.

Which of the following is a major drawback of using Knickerbocker’s theory in explaining FDI?

Which of the following is a major drawback of using Knickerbocker’s theory in explaining FDI? It does not explain why the first firm in an oligopoly decides to undertake FDI rather than to export or license.

What is the term that describes when two or more enterprises?

What is the term that describes when two or more enterprises encounter each other in different regional markets, national markets, or industries? Multipoint competition.

Is the trade deficit Good or bad?

In the simplest terms, a trade deficit occurs when a country imports more than it exports. A trade deficit is neither inherently entirely good or bad. A trade deficit can be a sign of a strong economy and, under certain conditions, can lead to stronger economic growth for the deficit-running country in the future.

How does trade deficit affect the economy?

In classic economic theory, countries with a trade deficit will see its currency weaken, whilst those with a trade surplus will see its currency strengthen. Consistent trade deficits can negatively impact the domestic nation through lost jobs, deflation, and government finances.

Why is the trade deficit important?

The most obvious benefit of a trade deficit is that it allows a country to consume more than it produces. In the short run, trade deficits can help nations to avoid shortages of goods and other economic problems. … With a cheaper domestic currency, imports become more expensive in the country with the trade deficit.

What are the two types of FDI?

Typically, there are two main types of FDI: horizontal and vertical FDI. Horizontal: a business expands its domestic operations to a foreign country. In this case, the business conducts the same activities but in a foreign country.

What are two limitations of licensing?

The disadvantages of licensing can be viewed from two perspectives: licensor and licensee. Disadvantages to the licensor include: The licensor having loss of control of their intellectual property. The licensor having to depend on the skills, abilities, and resources of the licensee to generate revenues.

What does pragmatic nationalism view of FDI argue?

The pragmatic nationalist view is that FDI has both benefits and costs. FDI can benefit a host country by bringing capital, skills, technology, and jobs, but those benefits often come at a cost. … According to this view, FDI should be allowed only if the benefits outweigh the costs.

What is meant by internationalization?

Internationalization is the practice of designing products, services and internal operations to facilitate expansion into international markets. Localization is the adaptation of a particular product or service to one of those markets.

What are the types of internationalization?

There are three main international strategies available: (1) multidomestic, (2) global, and (3) transnational (Figure 7.23 “International Strategy”).

What is the internationalization process?

Internationalization describes designing a product in a way that it may be readily consumed across multiple countries. This process is used by companies looking to expand their global footprint beyond their own domestic market understanding consumers abroad may have different tastes or habits.

What is dunning eclectic theory?

Based on the internalization theory of British economist J.H Dunning, the eclectic paradigm is an economic and business method for analyzing the attractiveness of making a foreign direct investment (FDI) … The eclectic paradigm model follows the OLI framework.

What is the monopolistic advantage theory?

Monopolistic Advantage Theory an approach in international business which explains why a particular national firm is able to compete with indigenous competitors in overseas market. … Market imperfections give the firm, which has market power, a competitive advantage over its rival.

What is oligopoly in economics?

An oligopoly is a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies. The number of firms is small enough to give each firm some market power. Context: … One typical asymmetric oligopoly is the dominant firm.

Are a major type of foreign investment risk that is insurable through government backed programs?

Many investor nations now have government-backed insurance programs to cover major types of foreign investment risk. The types of risks insurable through these programs include the risks of expropriation (nationalization), war losses, and the inability to transfer profits back home.

In which way can the home country’s balance-of-payments benefit from FDI made in a foreign country?

In which way can the source country’s balance of payments benefit from FDI made in a foreign country? … Through their choice of policies, home countries can both encourage and restrict FDI by local firms.

Which of the following allows two or more firms to share the fixed costs and associated risks of developing new products or processes?

Strategic alliances allow firms to share the fixed costs of developing new products or processes.

When transportation costs are added to production costs?

Question: When transportation costs are added to production costs, it becomes unprofitable to ship some products over a large distance.

Which political view allows FDI so long as the benefits outweigh the costs group of answer choices?

16. Which political view allows FDI so long as the benefits outweigh the costs? The pragmatic nationalist view is that FDI has both benefits and costs. According to this view, FDI should be allowed so long as the benefits outweigh the costs.

What three reasons are used to explain the retreat of the radical position by the early 1990s?

There seem to be three reasons for this: (1) the collapse of communism in eastern Europe; (2) the generally abysmal economic performance of those countries that embraced the radical position, and a growing belief by many of these countries that FDI can be an important source of technology and jobs and can stimulate …

What are the 3 types of mergers?

The three main types of mergers are horizontal, vertical, and conglomerate. In a horizontal merger, companies at the same stage in the same industry merge to reduce costs, expand product offerings, or reduce competition. Many of the largest mergers are horizontal mergers to achieve economies of scale.

What are the 4 types of mergers?

Types of Mergers

What is merger and types?

A merger is the voluntary fusion of two companies on broadly equal terms into one new legal entity. The five major types of mergers are conglomerate, congeneric, market extension, horizontal, and vertical.