A purely domestic firm sources its products, sells its products, and raises its funds domestically
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)can be more competitive than a MNC on its home turf due to superior knowledge of the local market.
C)can still face exchange rate risk, just like a MNC.
D)all of the above are true

Question

Quizplus · Accepted Answer

A purely domestic firm can face competition from a multinational corporation that has the advantage of sourcing its products in one country, selling them in multiple countries, and raising funds in a third country. However, the purely domestic firm can have an advantage on its home turf due to its superior knowledge of the local market. Additionally, a purely domestic firm can still face exchange rate risk if it engages in international transactions. Therefore, all of the above statements are true.

A Purely Domestic Firm Sources Its Products, Sells Its Products