A(n) ________ is the advantage that arises from internalizing a business activity rather than leaving it to a relatively inefficient market.
A) ownership advantage
B) internalization advantage
C) location advantage
D) market power advantage

Question

Quizplus · Accepted Answer

The advantage described in the question is the internalization advantage. This refers to the benefits that a firm gains by bringing an activity in-house instead of relying on an external market to provide that activity. By internalizing, a firm can gain greater control over the quality and timing of the activity, leading to improved efficiency and effectiveness. Ownership advantage (A) is a broader term that refers to any advantage that a firm has due to owning a particular asset or capability. Location advantage (C) refers to the benefits that arise from locating a business in a particular area, such as access to skilled labor or natural resources. Market power advantage (D) refers to the advantages that arise from a firm's ability to exert influence over its market, such as through price-setting power or control over distribution channels.

A(n) ________ Is the Advantage That Arises from Internalizing a Business