MNCs may undertake overseas investment projects in a foreign country, despite the fact that local firms may enjoy inherent advantages. This implies that
A)MNCs are making a mistake in this case and will have to eventually withdraw.
B)MNCs should have significant advantages over local firms such as comparative advantages due to intangible assets.
C)the local firms will not have to compete due to their inherent advantages over the foreigners.
D)none of the above

Question

Quizplus · Accepted Answer

MNCs should have significant advantages over local firms such as comparative advantages due to intangible assets. These intangible assets could include brand recognition, technology, marketing expertise, and access to financial resources. Additionally, MNCs may have economies of scale that enable them to produce at a lower cost than local competitors. These advantages can help MNCs overcome any inherent advantages enjoyed by local firms and succeed in their overseas investment projects.

MNCs May Undertake Overseas Investment Projects in a Foreign Country