Question

In: Finance

If an MNC exports to a country and then establishes a subsidiary to produce and sell the same product in that country

If an MNC exports to a country and then establishes a subsidiary to produce and sell the same product in that country, cash flows from existing operations (exports from the home country) would likely be__ affected by the project.

a.adversely

b. not

c.favorably

d. the direction of the impact may vary

Solutions

Expert Solution

As the susbsidiary is in the same line of business vertical of production and sales of the same product, the cash flows from existing operations is most likey to be cannibalized and be adversely affected by the project.If, on the other hand, the MNC establishes a subsidiary that buys components from the parent the cash flows will most likey be favorable.

Answer is a.adversely

jeff jeffy answered 2 years ago
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