Question 1
In emerging markets, MNEs must set prices appropriate for local conditions because ________.
◦ research and development is relatively cheaper in emerging markets
◦ of high corruption and bureaucracy
◦ of an inadequate legal framework
◦ emerging market consumers cannot pay high prices
Question 2
Maximus Motor Company (Scenario)
Maximus Motor Company is a British automobile manufacturer that builds high-end luxury cars for sale around the world. Maximus managers recognize they are missing opportunities in emerging markets, such as India, which have an increasing number of middle-class people ready to purchase affordable cars. Competitors that entered the Indian market experienced significant profits over the last two years. Maximus managers have been assigned the task of determining the best strategy for Maximus to do business in India.
Which of the following is likely to be the most beneficial to Maximus if it builds a manufacturing facility in India?
◦ legal precedents
◦ low-cost labor pool
◦ government regulations
◦ solid infrastructure
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