Question

Multinational corporations operate in locations across the world. Each company has its own motive for its presence in different countries.
Consider the following case:
RTE Telecom Inc. is an American company that produces high-tech electronics. Its managers have decided to move some of its production facilities to Japan in an attempt to circumvent certain governmental regulations. Which of the following best describes the reason RTE Telecom Inc. has decided to go global?

a. To avoid political, trade, and regulatory hurdles
b. To broaden its markets
c. To seek production efficiency

Answer 1

Answer:

a. To avoid political, trade, and regulatory hurdles

Explanation:

The question states that RTE Telecom is opening a production facility in Japan to circumvent governmental regulations. Circumvent means to overcome a problem by going around the problem, in a deceitful way.

This means that RTE is trying to avoid some type of regulation or law either in Japan or the US. Many times MNCs move their operations to foreign countries to pay less taxes, avoid certain trade barriers, or avoid certain laws specially regarding the environment or other negative externalities generated by their production processes.