What motivates firms to become involved in international trade ...

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What motivates firms to become involved in international trade and foreign direct investment?
 
  What will be an ideal response?

Question 2

Bad news in Korea should be delivered ________.
 
  A) right away
  B) in private
  C) at the end of the day
  D) when another person opens a gift

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Answer to Question 1

MNEs engage in international trade for a variety of reasons but mainly because both parties to the transaction, who happen to reside in two different countries, believe they benefit from the voluntary exchange. Numerous factors can influence a firm's decision to undertake FDI. Some FDI may be undertaken to reduce the firm's costs. Such supply factors include production costs, logistics, availability of natural resources, and access to key technology. The decision to engage in FDI may be affected by such demand factors as developing access to new customers, obtaining marketing advantages through local production, exploiting competitive advantages, and maintaining nearness to customers as they internationalize their operations. Political considerations may also play a role in FDI. Often firms use FDI to avoid host country trade barriers or to capture economic development incentives offered by host country governments.

Answer to Question 2

C

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Excellent

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