A Multinational Enterprise (MNE)is Said to Be Pursuing a Multidomestic

question 26

Multiple Choice

A multinational enterprise (MNE) is said to be pursuing a multidomestic strategy when it

• A) is pursued in response to low pressure for local responsiveness and low pressure for cost reduction.
• B) attempts to reap significant economies of scale by pursuing a global division of labor based on wherever best-of-class capabilities reside at the lowest cost.
• C) attempts to maximize local responsiveness, hoping that the host country consumers will perceive it to be a local company.
• D) operates on the assumptions made in the globalization hypothesis in order to lower costs.

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Definitions:

Financial Risk

The possibility of losing money on an investment or business venture.

Risk-Averse

A characteristic describing individuals or entities that prefer to avoid risks and favor more certain outcomes.

Marginal Utility

The additional satisfaction or utility that a consumer derives from consuming one more unit of a good or service.

Income

Money that an individual or business receives in exchange for providing a good or service or through investing capital.