Both external and internal factors affect the operation of a multinational enterprise (MNE). External factors are outside the immediate control of the firm while internal factors are within the control of the firm. Give examples for both and discuss how they would affect the operations of the MNE.
What will be an ideal response?
POSSIBLE RESPONSE: Some examples of external factors are government policies, political risk, and changes in exchange rate between the host country and the home country. Internal factors include firm-specific advantages and transfer pricing. The multinational firm may have to incur costs from external factors. For example, because of competition, the multinational firm may not be able to pass on costs of government regulations to consumers and instead have to accept lower profits. Internal factors such as transfer pricing are within the control of the firm and the firm can use these advantages to increase its profits, for instance, by shifting reported profits to low-tax countries.
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A. explicit costs. B. implicit costs. C. opportunity costs. D. normal profit.
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A) the less is the elasticity of demand. B) the less chance a consumer will be able to adjust. C) the more the consumer will be willing to pay. D) the greater is the elasticity of demand.
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a. price leadership b. tying c. price discrimination d. merging
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A. decrease; increase B. increase; increase C. decrease; decrease D. increase; decrease