When FDI Takes the Form of an Acquisition of an Established

question 78

Multiple Choice

When FDI takes the form of an acquisition of an established enterprise in the host economy,research suggests that once the initial period of restructuring is over,enterprises acquired by foreign firms tend to:

• A)grow their employment base at a faster rate than domestic rivals.
• B)engage in downsizing and retrenchment.
• C)reduce their pay scales to match those of local companies.
• D)reduce employment to cut costs and control prices.

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Definitions:

Liquidity

Liquidity refers to the ease with which assets can be converted into cash without significantly affecting their market price, crucial for meeting short-term obligations.

Asset Turnover Ratio

A financial metric that measures the efficiency of a company in using its assets to generate sales or revenue.

Profitability

A measurement of an entity's ability to generate income in relation to its revenue, assets, or equity.

Assets

Resources owned by a company that have economic value and can be used to meet its obligations or invest in its operations.