Which of the Following Is a Drawback of Decentralizing a Multinational

question 75

Multiple Choice

Which of the following is a drawback of decentralizing a multinational company?

• A) It may lead to increased exchange rate risk.
• B) It may result in lack of control and results in increasing risk.
• C) It creates less responsiveness to the needs of a subunit's customers, suppliers, and employees.
• D) It may lead to an increase in bureaucracy.

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Definitions:

Debt Ratio

A financial ratio that compares the amount of a company’s total debt to its total assets, indicating the leverage level.

Assets

Resources owned by a company or individual considered valuable and can be used to produce positive economic value.

Equity

The residual interest in the assets of a company after deducting liabilities, representing the ownership interest of shareholders.

Note Payable

An obligation in the form of a promissory note, which requires the borrower to pay back the loan or debt to the lender at a future date.