If the World Were Flat

question 21

Multiple Choice

If the world were flat:

• A)one could sell the same products and services in the same way in every country.
• B)one has to sell products and services according to the needs of the host country.
• C)one needs to decentralize decision-making authority to local business units in each country.
• D)a firm needs to pursue different strategies in different locations to take advantage of economies of scale.
• E)a firm would need to focus on maximizing local responsiveness.

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Definitions:

Profitability Index

A calculation used in capital budgeting to determine the relative profitability of an investment, computed as the present value of future cash flows divided by the initial investment cost.

Crossover Rate

The crossover rate is the rate of return at which two projects have the same net present value (NPV), used in capital budgeting to compare the desirability of investments or projects.

Profitability Index

A financial tool used to evaluate the attractiveness of an investment by dividing the present value of future cash flows by the initial investment cost.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment’s cost.