Assume That Ford Motor Company Obtains Some of Its Inputs

question 103

Multiple Choice

Assume that Ford Motor Company obtains some of its inputs in Mexico (foreign sourcing) .As the peso becomes a larger portion of Ford's total costs, a dollar appreciation leads to a _______ in the peso cost of a Ford vehicle and a _______ in the dollar cost of a Ford compared to the cost changes that occur when all input costs are dollar denominated.

• A) smaller increase, larger decrease
• B) smaller increase, smaller decrease
• C) larger increase, smaller decrease
• D) larger increase, larger decrease

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Definitions:

Resource Heterogeneity

Resource heterogeneity is the concept in strategic management that resources and capabilities differ across firms, which can lead to competitive advantages.

Supplier Power

The influence that suppliers have over the price and quality of goods and services, often determined by the number of suppliers in the market.

Switching Costs

The costs associated with changing from one product, service, or supplier to another, including financial, effort, and time expenses.

Buyer Power

The influence that purchasers have over the price and terms of purchase, which can affect market dynamics and pricing strategies.