国际财务管理（英文版·原书第9版） 答案Solutions-Manual-第16章　对外直接投资和跨国并购

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CHAPTER16FOREIGNDIRECTINVESTMENTANDCROSS-BORDERACQUISITIONS

ANSWERS&SOLUTIONSTOEND-OF-CHAPTERQUESTIONSANDPROBLEMS

QUESTIONS

1.Recently,manyforeignfirmsfrombothdevelopedanddevelopingcountriesacquiredhigh-techU.S.firms.WhatmighthavemotivatedthesefirmstoacquireU.S.firms?

Answer:Manyforeignfirmsmighthavebeenmotivatedtogainaccesstotechnicalknow-howresidinginU.S.firmsandatthesametimemonopolizeitsuse.Refertothereverse-internalizationhypothesisdiscussedinthetext.

2.JapaneseMNCs,suchasToyota,Toshiba,Matsushita,etc.,madeextensiveinvestmentsintheSoutheastAsiancountrieslikeThailand,MalaysiaandIndonesia.Inyouropinion,whatforcesaredrivingJapaneseinvestmentsintheregion?

Answer:Mostlikely,theseJapaneseMNCshaveinvestedheavilyinSoutheastAsiainordertotakeadvantageofunderpricedlaborservicesandcheaperlandandotherfactorsofproduction.Refertothelife-cycletheoryofFDI.

3.SincetheNAFTAwasestablished,manyAsianfirmsespeciallythosefromJapanandSouthKoreamadeextensiveinvestmentsinMexico.WhydoyouthinktheseAsianfirmsdecidedtobuildproductionfacilitiesinMexico?

Answer:AsianfirmsmighthavebeenmotivatedtogainaccesstoNAFTAofwhichMexicoisamemberandcircumventtheexternaltradebarriersmaintainedbyNAFTA.

4.HowwouldyouexplainthefactthatChinaemergedasoneofthemostimportantrecipientofFDIinrecentyears?

Answer:ChinaattractedagreatdealofFDIrecentlybecauseforeignfirmswantto(i)takeadvantageofrelativelyinexpensivelaborandotherresources,andalso(ii)gainaccesstotheChinesemarketthatisoftennotaccessibleotherwise.

5.ExplaintheinternalizationtheoryofFDI.Whatarethestrengthandweaknessofthetheory?

Answer:Accordingtotheinternalizationtheory,firmsthathaveintangibleassetswithapublicgoodpropertytendtoundertakeFDItotakeadvantageoftheassetsonalargescaleand,atthesametime,preventmisappropriationofreturnsfromtheassetsthatmayoccurduringarm’slengthtransactionsinforeigncountries.Thetheorycanbeeffectiveinexplaininggreenfieldinvestments,butnotinexplainingcross-bordermergersandacquisitions.

6.ExplainVernon’sproductlife-cycletheoryofFDI.Whatarethestrengthandweaknessofthetheory?

Answer:Accordingtotheproductlife-cycletheory,firmsundertakeFDIataparticularstageinthelife-cycleoftheproductsthattheyinitiallyintroduced.Whenanewproductisintroduced,thefirmchoosestokeepproductionathome,closetocustomers.Butwhentheproductbecomematureandforeigndemandsdevelop,thefirmmaybeinducedtostartproductioninforeigncountries,especiallyinlow-costcountries,toservethelocalmarketsaswellastoexporttheproductbacktothehomecountry.AscanbeinferredfromtheboxedreadingonSingerinthetext,theproductlife-cycletheorycanexplainhistoricaldevelopmentofFDIquitewell.Inrecentyears,however,theinternationalsystemofproductionhasbecometoocomplicatedtobeexplainedneatlybythelife-cycletheory.Forexample,newproductsareoftenintroducedsimultaneouslyinmanycountriesandproductionfacilitiesmaybelocatedinmanycountriesatthesametime.

7.Whydoyouthinkthehostcountrytendstoresistcross-borderacquisitions,ratherthangreenfieldinvestments?

Answer:Thehostcountrytendstoviewgreenfieldinvestmentsascreatingnewproductionfacilitiesandnewjobopportunities.Incontrast,cross-borderacquisitionscanbeviewedasforeigntakeoverofexistingdomesticfirms,withoutcreatingnewjobopportunities.

8.Howwouldyouincorporatepoliticalriskintothecapitalbudgetingprocessofforeigninvestmentprojects?

Answer:Oneapproachistoadjustthecostofcapitalupwardtoreflectpoliticalriskanddiscounttheexpectedfuturecashflowsatahigherrate.Alternatively,onecansubtractinsurancepremiumforpoliticalriskfromtheexpectedfuturecashflowsandusetheusualcostofcapitalwhichisappliedtodomesticcapitalbudgeting.

9.Explainandcompareforwardvs.backwardinternalization.

Answer:ForwardinternalizationoccurswhenMNCswithintangibleassetsmakeFDIinordertoutilizetheassetsonalargerscaleandatthesametimeinternalizeanypossibleexternalitiesgeneratedbytheassets.Backwardinternalization,ontheotherhand,occurswhenMNCsacquireforeignfirmsinordertogainaccesstotheintangibleassetsresidingintheforeignfirmsandatthesametimeinternalizeanyexternalitiesgeneratedbytheassets.

10.WhatcanbethereasonforthenegativesynergisticgainsforBritishacquisitionsofU.S.firms?

Answer:NegativesynergiesforBritishacquisitionsofU.S.firmsmayreflectthatBritishmanagersmighthavebeenmotivatedtoinvestinU.S.firmsinordertopursuetheirowninterests,suchasbuildingcorporateempire,ratherthanshareholders’interests.Negativesynergiescanbeviewedasagencycosts.

11.Definecountryrisk.Howisitdifferentfrompoliticalrisk?

Answer:Countryriskisabroadermeasureofriskthanpoliticalrisk,astheformerencompassespoliticalrisk,creditrisk,andothereconomicperformances.

12.WhataretheadvantagesanddisadvantagesofFDIasopposedtoalicensingagreementwithaforeignpartner?

Answer:ThemainadvantageofFDIoverlicensingagreementwithaforeignpartneristhatitprovidesprotectionagainstpossibleinterlopers.ThemaindisadvantageofFDIisthatitiscostlyandtimeconsumingtoestablishforeignpresenceinthismannerandFDIisprobablymorevulnerabletopoliticalrisk.

13.WhatoperationalandfinancialmeasurescanaMNCtakeinordertominimizethepoliticalriskassociatedwithaforeigninvestmentproject?

Answer:First,MNCsshouldexplicitlyincorporatepoliticalriskinthecapitalbudgetingprocessandadjusttheproject’sNPVaccordingly.Second,MNCscanformjoint-ventureswithlocalpartnersorformaconsortiumwithotherMNCstoreducerisk.Third,MNCscanpurchaseinsuranceagainstpoliticalriskfromOPIC,Lloyd’s,etc.

14.StudytheexperienceofEnroninIndia,anddiscusswhatwecanlearnfromitforthemanagementofpoliticalrisk.

Answer:Thisquestioncanbeusedasamini-caseormini-project.Studentscanutilizevariousbusiness/financialpublications,suchasWallStreetJournal,FinancialTimes,andBusinessweek,tostudytheissue.

15.DiscussthedifferentwayspoliticaleventsinahostcountrymayaffectlocaloperationsofanMNC.

Answer:Theanswercanbeorganizedbasedonthethreetypesofpoliticalrisk:Namely,transferrisk,operationalrisk,andcontrolrisk.Transferriskarisesfromtheuncertaintyaboutcross-borderflowsofcapital,payments,know-how,etc.Operationalriskarisesfromtheuncertaintyaboutthehostcountry’spoliciesaffectingthelocaloperationsofMNCs.Controlriskarisesfromtheuncertaintyaboutthehostcountry’spolicyregardingownershipandcontroloflocaloperationsofMNCs.

16.WhatfactorswouldyouconsiderinevaluatingthepoliticalriskassociatedwithmakingFDIinaforeigncountry.

Answer:Factorstobeconsideredinclude:(1)thehostcountry’spoliticalandgovernmentsystem;(2)trackrecordofpoliticalpartiesandtheirrelativestrength;(3)thedegreeofintegrationintotheworldsystem;(4)thehostcountry’sethnicandreligiousstability;(5)regionalsecurity;and(6)keyeconomicindicators.

17.Daimler,aGermancarmaker,acquiredChrysler,thethirdlargestU.S.automaker,for$40.5billionin1998.Butafteryearsofdecliningprofitandlaborproblem,DaimlersoldoffChryslertotheU.S.privateequityfirmCerberusfor$7.4billionin2007.StudytheDaimlerChryslersagaandidentifythemainfactorsforthefailureofthiscross-bordermerger.

Suggestedanswer:Daimler-Chryslermergerfailedtoproducesynergyeffectduetothefailuretointegratethetwocompanieswithdifferentcorporatecultures,inabilitytocutdownlaborcostsduetoastronglaborunionatChrysler,andthecompetitivepressurefromJapanesecarmakers.

18.LuredbyextremelylowlaborcostsinBangladesh,manyMNCsintheso-calledfast-fashionbusiness,includingH&M,Inditex,parentofthepopularZarabrand,Marks&Spencer,andGap,areheavilyoutsourcingtoBangladesh.Asaresult,garmentindustryhasbecomeamajorsourceofemploymentandincometoBangladesh.However,theindustryhasrecentlysufferedaspateofdisasters.InSeptember2012,about110workersdiedinablazeattheTazreenFashionsfactoryoutsideDhaka,thecapitalcity.What’sworse,inApril2013,morethan1,100workersperishedinthecollapseoftheRenaPlazaBuildinginDhaka.Inyouropinion,(i)whataretherootcausesofthedisasters?(ii)whatshouldbedonetopreventfuturedisasters?

Suggestedanswers:(i)Thedisastersmaybeprimarilyattributabletotheweaklegalprotectionofworkers’rightsandthelackofpropergovernmentsupervisionofthehealthandsafetyconditionsworkersfaceinfactories.(ii)Futuredisastersmaybepreventedbystrongerlegalandadministrativeprotectionofworkers’rights,betterpaymentstothefactoryownersandworkerstoreducetheincen