The Best Means of Using Direct Foreign Investment (DFI) to Fully

question 15

Multiple Choice

The best means of using direct foreign investment (DFI) to fully benefit from cheap foreign factors of production is probably to:

• A) acquire a competitor that has controlled its local market.
• B) establish a subsidiary in a new market that can sell products produced elsewhere; this allows for increased production and possibly greater production efficiency.
• C) establish a subsidiary in a market that has relatively low costs of labor and land; sell the finished product to countries where the cost of production is higher.
• D) establish a subsidiary in a market in which raw materials are cheap and accessible; sell the finished product to countries in which the raw materials are more expensive.

---

Definitions:

Earnings At Risk

Potential future losses in wages or salary due to various risk factors, including economic downturns, organizational changes, or personal performance issues.

Incentive Pay

Additional compensation awarded to employees for achieving specific goals, exceeding performance targets, or exceptional work.

Merit Pay

A pay increase given to employees based on their job performance, used as a motivational strategy by employers.

Multicultural Workforce

A diverse team of employees from various cultural backgrounds, enhancing creativity and problem-solving through different perspectives.