Dispersing Particular Value Chain Activities Across Many Countries Rather Than

question 107

Multiple Choice

Dispersing particular value chain activities across many countries rather than concentrating them in a select few countries can be more advantageous, EXCEPT when

• A) buyer-related activities (such as sales, advertising, after-sale service and technical assistance) need to take place close to buyers.
• B) buyers demand short delivery times and/or high transportation costs make it uneconomical to operate from one or just a few locations.
• C) it helps hedge against the risks of exchange rate fluctuations, supply disruptions, and adverse political developments.
• D) there are diseconomies of scale in trying to operate from a single location.
• E) there are reasons to decouple buyer-related activities in favor of locational advantages.

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Definitions:

Net Operating Income

Net Operating Income is the total profit of a company after deducting operating expenses but before interest and taxes.

Net Operating Income

A company's profitability from its regular business operations, excluding expenses and incomes from other non-operating activities.

Contribution Margin Per Unit

The difference between the selling price per unit and the variable costs per unit.

Variable Manufacturing Costs

Expenditures that shift in accordance with the volume of output, like raw materials and direct labor costs.