To Use Location to Build Competitive Advantage When Competing in Both

question 92

Multiple Choice

To use location to build competitive advantage when competing in both domestic and foreign markets,a company must

• A) scatter its production plants across many different country markets so as to minimize the costs of shipping to its own distribution centers and/or to wholesalers/retail dealers.
• B) consider (1) whether to concentrate each activity it performs in a few select countries or to disperse performance of the activity to many nations and (2) in which countries to locate particular activities.
• C) concentrate buyer-related activities in a few well-chosen locations so as to maximize the capture of distribution-related scale economies.
• D) disperse both production and distribution activities across many nations in order to hedge against fluctuating exchange rates and lessen the risks of adverse political developments.
• E) avoid selling in countries where there are high trade barriers or where buyers purchase in small quantities.

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Definitions:

Social Benefit

The total advantage or positive impact on society from an action or policy, including both direct effects and externalities.

Social Cost

Represents the total cost of an action or decision, including both the private costs borne by individuals directly involved and external costs to society as a whole.

Measles Vaccines

Medical injections that provide immunity against the measles virus, preventing measles disease.

External Benefits

Positive effects enjoyed by a third party when an economic transaction takes place, without them paying for the benefits received.