1. (a) According to the OLI paradigm, foreign direct investment is explained by three conditions (ownership advantages, location advantages and internalization). Examine the factors that influence firms to locate subsidiaries close to markets. (b) Managers of multinational enterprises are advised to take advantage of their home region institutions such as the European Union. Assume you are the manager of a multinational enterprise in Belgium. Why is the institutional framework created by the EU pivotal for business? (c) Identify firms' strategic responses that managers adopt in order to deal with foreign currency exchange rate movements