Dispersing Particular Value Chain Activities Across Many Countries Rather Than

question 33

Multiple Choice

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

• A) buyer-related activities (such as sales,advertising,after-sale service and technical assistance) need to take place close to buyers.
• B) 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) All of these choices are correct.

---

Definitions:

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Goodwill Impairment

A charge that companies record when the book value of goodwill on their balance sheets exceeds its fair market value, indicating that the asset has lost value.

Depreciation Expense

Depreciation Expense refers to the systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Effective Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total amount of tax by the taxable income.