Which of the Following Observations Was Made by Raymond Vernon

question 45

Multiple Choice

Which of the following observations was made by Raymond Vernon?

• A) Firms undertake FDI at particular stages in the life cycle of a product they have pioneered.
• B) Firms will favor exporting over FDI as an entry strategy when trade barriers are high.
• C) FDI is prompted by imitative behavior in oligopolistic industries.
• D) Impediments to the sale of know-how increase the profitability of FDI relative to licensing.

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Definitions:

Internal Growth Rate

The maximum rate at which a company can expand internally without needing to obtain additional external financing.

Capital Intensity Ratio

A metric that measures the amount of capital needed per unit of output, indicating how capital-intensive a business operation is.

Operating Capacity

The maximum output that an organization can produce with its current resources and constraints.

Dividend Payout Ratio

A financial metric that shows what portion of a company's earnings are distributed to shareholders in the form of dividends.