2 questions, the answer of each question should be no more than 250 words ( each question's answer is separate from the other) and it must be referenced with APA 6th. Q1: What are the main factors...

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Q1: What are the main factors that can be used to explain the location of MNEs under the
eclectic theory of international business?
Answer – Under the eclectic theory of international business, there are three important factors
that contribute to the success of multinational enterprises through internalization theory which in
turn depends on the transaction cost theory associated with the firm. These three factors include
ownership advantage, location advantage and internalization advantage which helps in earning
competitive advantage to the foreign firms under the condition of higher transaction costs in free
markets as compared to what it would have been inside the firm.
The location of MNE helps them in earning competitive advantage in the form of lower tax rates
in specific country or region, lower wage rates to be paid to the labour, existence of ample raw
materials due to its natural presence at a particular location, existence of specialized skills such
as IT skills in a particular country, etc. Apart from that, there are fewer impediments, both
natural and artificial, to international trade in few countries like in China which attracts more
FDI at the given location. Also, the ease level to form strategic...