Question

1. Describe the difference(s) between the following terms/phrases
   1. Subsidiaries/affiliates vs. Associates of a MNC
   2. Vertical FDI vs. Horizontal FDI
   3. Shareholders vs. Stakeholders
   4. Greenfield FDI vs. Mergers & Acquisitions FDI
   5. FDI vs. Non-Equity Modes (NEM) of entry
   6. Plant-level economies of scale vs. firm-level economies of scale
   7. Offshoring vs. offshore outsourcing
   8. Transfer pricing vs. arms-length trade
   9. Intra-firm vs. inter-firm trade
   10. Internalization vs. Internationalization

Answer 1

Answer(a) :

Subsidiaries/ affiliates	Associates of an MNC
It is created by the Parent company.	It is a partner or companion in MNC
Its purpose is to established goodwill with customers and vendors	Its purpose is for the parent company is to enhance asset value
It provides a tax benefit to the parent companies at the state level.	It supports the parent company to a stable financial account, research, and technological advancement.

Answer(b) :

Vertical FDI	Horizontal FDI
It means locating each stage of production in the country where it can be done at the least cost. For eg., A Japanese car manufacturer obtains a tire manufacturer.	It means a company is going to operate its business model in some other country. for eg. Toyota assembles motor cars in Japan

Answer(c) :

Shareholders	Stakeholders
He/she is the person who owns a shares in a company.	It is an individual, organization, social group, or society that has a stake in the business.

Answer(d) :

Greenfield FDI	Merger and acquisition FDI
It is highly risky investment by the company. In this parent company creates a new operation in a foreign country, those who sponsor will get a greater role and control.	It is the consolidation of companies through various financial transactions.

Answer(e) :

FDI	Nonequity mode of entry
It is the way of investment in another country in order to expand the company.	It is a type of contractual mode by leasing, licensing, franchising, and by management contracts.

Answer(f)

Plant level economies of scale	firm-level economies of scale
It is related to the total output receive from the plant. In this mangers increases the unit of production in order to get maximum output.	It is related to the total output earned by the firms. in these firms get profit by increasing the quantity of output and it is lowering the fixed cost.

Answer(g)

Offshoring	Offshore outsourcing
It means the operational process relocated to different countries in order to get work done.	it means contracting work to an external source to get specialized skills, cost efficiencies

Answer (h)

transfer pricing	arm's length trade
It is the way of transferring tax liabilities to low-cost tax jurisdictions. It helps to reduce duty cost while shipping goods	It is a type of business deal happens when buyer and seller act independently.

Answer(i) :

intra firm trade	inter-firm trade
It is a trade between parent company with a foreign subsidiary under foreign control	It happens between two or more companies.

Answer(j) :

Internalization	internationalization
It is a type of transaction which happens within the organisation rather than in an open market	It is an action or process of designing products, services, and internal operations in order to facilitate international markets.