Question

1.) Imperfect Markets a.) Explain how the existence of imperfect markets has led to the establishment of subsidiaries in foreign markets. b.) If perfect markets existed, would wages, prices, and interest rates among countries be more similar or less similar than under conditions of imperfect markets? Why?

2.) International Opportunities a.) Do you think the acquisition of a foreign firm or licensing will result in greater growth for an MNC? Which alternative is likely to have more risk? b.) Describe a scenario in which the size of a corporation is not affected by access to international opportunities. c.) Explain why MNCs such as Coca-Cola and PepsiCo, Inc., still have numerous opportunities for international expansion.

Answer 1

Answer :-

(1).

First of all you need to know what is imperfect market A imperfect market can be regarded as such economic market which does not fulfill or comply the standards of the pre competitive market.The existence of Such imperfect markets has led to the establishment of subsidiaries in foreign markets because due to the reason of imperfects market resources can not be taken back easily or freely by the Multinational corporations. Therefore sometimes the MNC go to the resources in camparison to the retrieved resources.

If perfect markets existed Resources are become more transferable they are transfer in those countries who pay high prices for their product or services. Due to this reason the price of the products are generally or mostly same in the all countries which also helps to decrease the shortage of the resources in any specific country

(2).