Ch016 Foreign Direct Investment and Cross-Border Acquisitions

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1、Eun&Resnick4eCHAPTER16ForeignDirectInvestmentandCross-BorderAcquisitionsGlobalTrendsinFDIWhyDoFirmsInvestOverseas?TradeBarriersImperfectLaborMarketIntangibleAssetsVerticalIntegrationProductLifeCycleInternationalFinanceinPractice:LinearSequenceinManufacturing:Singer&CompanyShareholderDiversificatio

2、nServicesCross-BorderMergersandAcquisitionsPoliticalRiskandFDIInternationalFinanceinPractice:DaimlerChrysler:TheFirstGlobalCarColossusInternationalFinanceinPractice:StoriesPastandPresentSummaryMINICASE:EnronversusBombayPoliticians1Undera1981VoluntaryTradeAgreementJapaneseautomobilemanufacturerswer

3、enotallowedtoincreasetheirexportstotheU.S.market.Asaresult:a)Theyexitedthemarketb)Hondawasmotivatedtocircumventthetradebarriers.c)Honda’sFDImayhavebeenpartofanoverallcorporatestrategydesignedtobolstertheircompetitivepositionvis-à-vistheirdomesticrivalssuchasToyotad)Bothb)andc)Answer:d)2FollowingHo

4、nda’sFDIintheU.S.,a)TheU.S.governmentimposedaVoluntaryTradeAgreementunderwhichJapaneseautomobilemanufacturerswerenotallowedtoincreasetheirexportstotheU.S.market.b)ToyotaandNissanmadedirectinvestmentsinAmericac)SalesofHondasdeclinedd)noneoftheaboveAnswer:b)3Honda’sdecisiontobuildaplaninOhioa)Waswel

5、comedbytheUnitedAutoWorkersb)WasencouragedbyassistancefromthestateofOhio,includingimprovedinfrastructurearoundtheplantandabatementofpropertytaxes.c)InvolvedsettingupaspecialforeigntradezonethatallowedHondatoimportautopartsfromJapanatareducedtariffrate.d)AlloftheaboveAnswer:d)210Eun/ResnickWhenfirm

6、sundertakeFDI,a)TheybecomeMNCsb)Theyreducetheirtaxratesincetheycantelleachcountrythattheydobusinessinthattheypaidtheirtaxesinothercountries.c)Thecanexploitworkersbypayingthembelow-marketwagesindepreciatingcurrencies.d)AlloftheaboveAnswer:a)2FDIcantaketheformof:a)Greenfieldinvestmentb)Cross-borderM

7、&Ac)Establishingnewproductionfacilitiesinaforeigncountryd)AlloftheaboveAnswer:d)3TheFordMotorCompanyrecentlyacquiredMazda,aJapaneseautomaker,andJaguar,aBritishautomaker.a)Thisisanexampleofcross-borderM&Ab)Thiswas