Which of the following is true of a "follow the leader" scenario in the context of foreign direct investment?
A) Companies that practice "follow the leader" supply each other with inputs.
B) Companies that practice "follow the leader" pressurize each other to follow environmentally safe methods.
C) It is a frequent practice in industries with a limited number of large firms.
D) It is common in industries in which producers source component parts from suppliers.

Question

Quizplus · Accepted Answer

A "follow the leader" scenario in the context of foreign direct investment is common in industries with a limited number of large firms, where firms tend to imitate the investment strategies of the industry leader. This strategy is especially prevalent in industries with high capital requirements and high entry barriers, such as oil and gas, automobile, or electronics industries. Choices A, B, and D are incorrect as they do not apply to the "follow the leader" scenario in the context of foreign direct investment.

Which of the Following Is True of a "Follow the Leader