In Which of the Following Circumstances Is It Not Advantageous

question 99

Multiple Choice

In which of the following circumstances is it not advantageous for a multinational competitor to concentrate its activities in a limited number of locations in order to build competitive advantage?

• A) When the costs of performing certain value chain activities are significantly lower in certain geographic locations than in others
• B) When a company has competitively superior patented technology that it can license to foreign partners
• C) When there is a steep learning or experience curve associated with performing an activity in a single location
• D) When certain locations have superior resources, allow better coordination of related activities, or offer other valuable advantages
• E) When there are significant scale economies in performing the activity

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Definitions:

Equity Method

An accounting technique used for recording investments in which the investor has significant influence over the investee but does not exercise full control.

Significant Influence

This term refers to the power to participate in the financial and/or operating policy decisions of another entity, but not control those policies. It is often quantified by owning 20% to 50% of the voting shares of the investee company.

Investee

The company whose stock is purchased by the investor.

Held-to-Maturity Investments

Investments in debt securities that a company has the positive intent and ability to hold until maturity.