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List four ways a government can affect flow of FDI.
tax incentives or disincentives, regulation, subsidized loans and ownership restrictions. Withholding taxes are imposed when a company stops income out of a country. By lowering or raising withholding taxes, a county can impact the flow of FDI.
List at least four reasons why a firm enters joint venture.
(1) when the market potential is high and at the same time (2) their own market knowledge is limited, when it wants to (3) limit its financial exposure, (4) to avail of incentives provided by host governments that encourage joint ventures
List three different structures that can be set up to handle overseas offshore projects.
their own offices overseas, joint ventures with local companies, completely outsource to indirect or direct third-party vendors.
List the advantages and disadvantages ( 2 at least) of licensing/franchising.
- PRO: the licensor/franchisor is required to do very little analysis of the market, and most of the risk is borne by the local partner.
- CON: foreign company’s lack of control over technology and intellectual property rights, arrangements do (2) not provide the experience of developing a market that other entry modes provide and also the international company
Identify at least five factors that can be used for the location decision (manufacturing).
local tax rate; distance to suppliers; distance to markets; logistics; availability of utilities
List (at least) three major factors affecting the price of a currency.
inflation rates, interest rates and the level of exports and imports
List (at least) three types of convertibility.
Freely Convertible-When the country’s government allows both residents and nonresidents to purchase unlimited amounts of a foreign currency with it. Externally Convertible-When only nonresidents may convert it into a foreign currency without any limitations. Nonconvertible-When neither residents nor nonresidents are allowed to convert it into a foreign currency
List (at least) three main categories of foreign exchange risk
Transaction Exposure, Translation Exposure, Economic Exposure
List three reasons companies send service offshore
(1) the lower cost, (2) access to talent, and (3) the flexibility provided to businesses.
List four major types of international (global) business organizational structures.
1) international division structure, (2)a worldwide area structure, (3) a worldwide product division structure, and (4) a global matrix structure
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