Which of the Following Is Not a Risk Associated with a Global

question 5

Multiple Choice

Which of the following is not a risk associated with a global strategy?

• A) A firm with only one manufacturing location must export its product, sometimes at great distance from the operation.
• B) The geographic concentration of any activity may also tend to isolate that activity from the targeted markets.
• C) Concentrating an activity in a single location makes the rest of the firm dependent on that location.
• D) The pressures for local adaptation may elevate the cost structure of the firm.

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Definitions:

Forward Contract

An individualized contract between two counterparts to acquire or dispose of an asset at a fixed price on a specified future date.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) aimed at making global financial statements more comparable.

Hedge Transactions

A financial strategy used to minimize the risk of adverse price movements in an asset, often involving derivatives like futures or options contracts.

Fair-Value Method

An accounting approach that measures and reports assets and liabilities on the basis of estimated real-world values at the current time, rather than historical purchase prices.