Question

A purely domestic firm that sources its products, sells its products, and raises its funds domestically. . Which of the following is not correct?
a. can face stiff competition from a multinational corporation that can source its products in one country, sell them in several countries, and raise its funds in a third country.
b. cannot be more competitive than a MNC on its home turf even if it has superior knowledge of the local market.
c. can still face exchange rate risk, just like a MNC.
d. can still face country risk, just like a MNC.

Answer 1

Answer:

b. cannot be more competitive than a MNC on its home turf even if it has superior knowledge of the local market.

Explanation:

In the given scenario a company that sources its products, sells its products, and raises its funds domestically will most likely have more competitive advantage than a multinational corporation.

This is due to the fact that it has superior knowledge of the local market.

MNCs will have a hard time adapting to the local market to compete effectively with the local companies.

However local businesses and MNCs will face common challenges like country risk and exchange rate risk.

Because MNCs have ability to source its products in one country, sell them in several countries, and raise its funds in a third country they will provide a stiff competition