Which Type of Multinational Diversification Occurs When the Parent Firm

question 32

Multiple Choice

Which type of multinational diversification occurs when the parent firm establishes foreign subsidiaries to produce intermediate goods going into the production of finished goods?

• A) Forward vertical integration
• B) Backward vertical integration
• C) Forward horizontal integration
• D) Backward horizontal integration

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Definitions:

Barriers

Obstacles or impediments that prevent or hinder progress, such as trade barriers which can restrict the flow of goods between countries.

Control Over Price

The ability of a company or market to influence or set the price of goods and services.

Product Differentiation

The process of distinguishing a product or service from others, to make it more attractive to a particular target market.

Total Market

The entirety of the demand and supply for a particular good or service across all its potential markets.