- In recent years, Japanese FDI in the United States has grown far more rapidly than US FDI in Japan. Why do you think this is the case? What are the implications of this trend?
- Compare and contrast these explanations of horizontal FDI: the market imperfections approach, Vernon's product life-cycle theory, and Knickerbocker's theory of FDI. Which theory do you think offers the best explanation of the historical pattern of horizontal FDI? Why?
- Compare and contrast these explanations of vertical FDI: the strategic behavior approach and the market imperfections approach. Which theory do you think offers the better explanation of the historical pattern of vertical FDI? Why?
- You are the international manager of a US business that has just developed a revolutionary new personal computer that can perform the same functions as IBM and Apple computers and their clones but costs only half as much to manufacture. Your CEO has asked you to formulate a recommendation for how to expand into Western Europe. Your options are (a) to export from the United States, (b) to license a European firm to manufacture and market the computer in Europe, and (c) to set up a wholly owned subsidiary in Europe. Evaluate the pros and cons of each alternative and suggest a course of action to your CEO.
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