Correct Answer: C

Direct investment has many advantages:

(1)

cheaper materials or labor,

(2)

receipt of investment incentives from the host government, (3) a strong relationship with interested parties in the host country, (4) control of the investment,

(5)

a better image in the host country,

(6)

market access when domestic contest rules are in effect. However, direct investment is risky because of exposure to currency fluctuations, expropriation, potentially high exit barriers, and restraints on sending profits out of the country.

Correct Answer: B

Norms often provide a common identity for a group. Members feel they are part of a cohesive group with members who also share the same values.

Correct Answer: D

Norms are the standards of behavior adopted by a group when it is in its early stages. The norms of the group are often a composite of the personal and social backgrounds of the individuals who comprise the group.

Correct Answer: A

Negotiators should assess the best alternatives for both themselves and the other parties to determine their relative strength in the negotiation process. If alternatives are not readily available or are unattractive, a party is under additional pressure to make the negotiation work.

Correct Answer: C

Whether to expand capacity is a major strategic decision because of the capital required, the difficulty of forming accurate expectations, and the long time frame of the lead times and the commitment. The key forecasting problems are longterm demand and behavior of competitors. The key strategic issue is avoidance of industry overcapacity. Analysis of competitors determines when each will expand. The difficulty is that forecasting their behavior depends on knowing their expectations. Another difficulty is that each competitor's actions potentially affect all other competitors' actions, with the industry leader being most influential.