To Use Location to Build Competitive Advantage,a Company That Operates

question 83

Multiple Choice

To use location to build competitive advantage,a company that operates multinationally or globally must

• A) employ either an export strategy or a franchising strategy.
• B) scatter its production plants across many countries in different parts of the world so as to minimize transportation costs.
• C) consider (1) whether to concentrate each activity it performs in a few select countries or disperse performance of the activity to many nations and (2) in which countries to locate particular activities.
• D) locate production plants in those countries having suppliers that can supply all the necessary raw materials and components so as to avoid inbound shipping costs.
• E) concentrate all of its value chain activities in a single country-the one that has the best combination of low wage rates, low shipping costs, and low tax rates on profits.

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Definitions:

Investment Worth

The value of an investment, taking into account both potential returns and risk level.

Compounded Semiannually

Refers to the process where interest is added to the principal balance of a loan or deposit twice a year, effectively increasing the amount of interest earned or paid.

Promissory Note

A financial document in which one entity guarantees to pay a certain amount of money to another, either when asked or at an agreed-upon date in the future.

Discount Rate

The interest rate used in discounted cash flow analysis to determine the present value of future cash flows.