Author Question: Critical incident analysis examines ________. A) a situation under which an MNE is forced to ... (Read 63 times)

jc611 · **on:** Jul 7, 2018

Critical incident analysis examines ________.

A) a situation under which an MNE is forced to relocate operations abroad
B) an episode in which tension arises between employee and foreign counterpart due to a cross-cultural misunderstanding
C) an episode in which tension arises between an employee and a manager with regard to performance evaluation
D) a critical situation in which the internal stakeholders of a firm fail to reach a consensus with regard to a common issue

Question 2

Identify why a home country might support or discourage outgoing foreign direct investment.

What will be an ideal response?

juicepod · **Reply #1 on:** Jul 7, 2018

Answer to Question 1

B

Answer to Question 2

Home nations (those from which international companies launch their investments) may also seek to encourage or discourage outflows of FDI for a variety of reasons. But home nations tend to have fewer concerns because they are often prosperous, industrialized nations. For these countries, an outward investment seldom has a national impactunlike the impact on developing or emerging nations that receive the FDI. Nevertheless, among the most common reasons for discouraging outward FDI are the following:
1. Investing in other nations sends resources out of the home country-As a result, fewer resources are used for development and economic growth at home. On the other hand, profits on assets abroad that are returned home increase both a home country's balance of payments and its available resources.
2. Outgoing FDI may ultimately damage a nation's balance of payments by taking the place of its exports-This can occur when a company creates a production facility in a market abroad, the output of which replaces exports that used to be sent there from the home country.
3. Jobs resulting from outgoing investments may replace jobs at home-This is often the most contentious issue for home countries. The relocation of production to a low-wage nation can have a strong impact on a locale or region. However, the impact is rarely national, and its effects are often muted by other job opportunities in the economy. In addition, there may be an offsetting improvement in home country employment if additional exports are needed to support the activity represented by the outgoing FDI.
But foreign direct investment is not always a negative influence on home nations. In fact, under certain circumstances, governments might encourage it. Countries promote outgoing FDI for the following reasons:
1. Outward FDI can increase long-term competitiveness-Businesses today frequently compete on a global scale. The most competitive firms tend to be those that conduct business in the most favorable location anywhere in the world, continuously improve their performance relative to competitors, and derive technological advantages from alliances formed with other companies.
2. Nations may encourage FDI in industries identified as sunset industries-Sunset industries are those that use outdated and obsolete technologies or employ low-wage workers with few skills. These jobs are not greatly appealing to countries having industries that pay skilled workers high wages. By allowing some of these jobs to go abroad and retraining workers in higher-paying skilled work, they can upgrade their economies toward sunrise industries. This represents a trade-off for governments between a short-term loss of jobs and the long-term benefit of developing workers' skills.