Business Studies

Global enterprises have to make extra efforts with their marketing strategy in an untapped market.


ANSWER

True


SOLUTION

Vertical Expansion - Manufacturing

Vertical expansion occurs when multinational companies expand production processes to other countries. This strategy allows them to take advantage of factors such as the low costs of labor and raw materials, lower capital investment requirements and less stringent local laws and regulations. This means these companies can lower production costs and maximize profits. Some developing countries encourage multinational companies because of the innovative technology they bring to the host country and because they typically offer higher wages than the national average.

Vertical Expansion - Sales

Multinational companies also might expand by setting up sales units in host countries instead of marketing their products through local agencies. This allows the companies to ensure that their products reach their buyers and that they are in control of prices. Multinationals also may enter foreign markets when other brands offering the same products set up operations there. Competition makes it necessary for these companies to follow suit with units of their own. Multinational companies can give their sales units a level of autonomy, which allows them to operate and adapt their sales efforts according to market conditions in the host country.

Horizontal Expansion - Production

Often, multinational companies set up production units in other countries for the sole purpose of catering to the local market. They manufacture products in the host country for distribution in the same country. This helps companies save on transportation costs and shields their operations from uncertainties arising from fluctuations in currency values. They also use sequential marketing, a strategy that edges out the local competition by offering better and more state-of-the-art products. Another method they might use to eliminate competition is to merge with or acquire local companies.

Horizontal Expansion - Sales

When offering products in the host countries, multinational companies may present their goods and services just as they are offered in their home countries. Examples include branded and packaged food and beverages. They carry similar brand names and are similar in appearance. Companies also might set up showrooms and outlets to mimic international norms. Other companies adapt their products to suit local demand, tastes and customer requirements.

View Answers

You're just one step away

Create your Digital Resume For FREE on your name's sub domain "yourname.wcard.io". Register Here!


TRUE/FALSE Medium Published on 18th 08, 2020
Next Question
Questions 244531
Subjects 8
Chapters 125
Enrolled Students 204
Enroll Now For FREE

Realted Questions

Q1 Single Correct Medium
How is an MNC defined?
  • A. A MNC is a company that owns or controls production in more than one district in a country
  • B. A MNC is a company that owns or controls production in more than one state in a country
  • C. A MNC is a company that owns or controls production in more than one nation
  • D. All of the above

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q2 Single Correct Medium
Food co-operation of India is ________.
  • A. a joint stock company
  • B. company managed by department
  • C. company established by Special Act of Parliament
  • D. none of the above

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q3 Single Correct Medium
_________refers to that of the issued capital which has actually been subscribed by the public.
  • A. Called up capital
  • B. Subscribed capital
  • C. Issued capital
  • D. Nominal or authorized capital

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q4 Single Correct Medium
Which of the following is/are included in public sector enterprises as 'Navaratnas'?
  • A. BHEL
  • B. BPCL
  • C. GAIL
  • D. All of above

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer
Q5 Single Correct Medium
Job analysis provides information used for writing _________________.
  • A. Organisation chart
  • B. Policy
  • C. Job Description
  • D. Procedure

Asked in: Business Studies - Private, Public and Global Enterprises


1 Verified Answer | Published on 18th 08, 2020

View Answer