Your firm has developed a global presence with exporting and acquisition of a fe

Question

Your firm has developed a global presence with exporting and acquisition of a few businesses, which are now well integrated into your enterprise. You know there is a growing demand for your products, which consist of large kitchen appliances. As a result, you are considering expanding production. Trade barriers are relatively high in several of your key markets, and you do not foresee any major changes in this area. You know from experience that consumers in several key markets have very different preferences in design but the functionality remains essentially unchanged. You are fairly certain that financial markets will be characterized by volatility rather than stability. The manufacture of your product is not sophisticated.

Although relative factor costs may make a country look attractive as a location for performing a manufacturing activity, the firm must also look at the political economy, where, for example, _______ may eliminate this option.

a) emerging new technologies

b) regulations prohibiting foreign

c) direct investment access to raw materials

Explanation / Answer

b. A government may impose certain regulation on prohibiting foreign investment which eliminates the option of investing in that country.

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