Multinational Firms Have Traditionally Managed Operations Outside Their Home Country

question 7

Multiple Choice

Multinational firms have traditionally managed operations outside their home country with an approach that permits individual subsidiaries to compete independently in different country-markets. Here each subsidiary resembles a strategic business unit that is expected to contribute earnings and growth to the organization. This describes:

• A)a multidomestic strategy.
• B)a differentiated strategy.
• C)a global strategy.
• D)an export-based strategy.
• E)a coordinated strategy.

---

Definitions:

Contribution Margin

The difference between the sales revenue generated from a product or service and its variable costs.

Pretax Income

The income of a company before taxes are deducted, used to assess profitability before tax expenses are applied.

Margin of Safety

The difference between actual sales and break-even sales, measuring the risk of not reaching the break-even point.

Budgeted Income Statement

A financial statement forecasting the revenues, expenses, and net income for a specific period, based on proposed budgets and assumptions.