WGU D080 - ALL modules fully comprehensive latest updated questions bank 2025-2026 ( with expert curated questions and answers ) pass guaranteed

What is globalization?

i

international integration arises from the interchange of world views, products, ideas, and other aspects of culture.

What are the economic effects of globalization

Trade

Investment

Information Technology

What are the political effects of globalization

Recue the importance of nation-states

NGOs

What are the cultural effects of globalization

Transmission of ideas, meanings, and values around the world.

What is International Business

Relates to any situation where the production or dist og goods and svcs crosses country borders

Opportunity is boosted in globalization as trade and investment barriers are reduced

What are the different forms of international business

Organizations

Government Organizations

NGOs (Non-Government Org)

What is the 1st stages of going Global

Market Entry-Companies enter new countries using business models similar to the ones deployed in their home markets.

What is the 2nd stage of going Global

(product specialization), companies transfer the full production process of a particular product to a single, low-cost location and export the goods to various consumer markets.

What is the 3rd stage of going Global

(value chain disaggregation) represents the next step in the company's globalization of the supply chain infrastructure; companies disaggregate the production process and focus on completing each activity in the most advantageous location.

What is the 4th stage of going Global

(value chain reengineering), companies seek to further increase their cost savings by reengineering their processes to suit local market conditions by substituting lower cost labor for capital.

What is the 5th stage of going Global

(creation of new markets), the focus is on market expansion.

4 Industry Globalization Drivers

1. Market Opportunities - opportunity for scale and scope; Convergence of needs

2.Cost Drivers-Economies of scale and scope; Exploiting cost of factors of production

3. Competitive Drivers- New Markets and increased level of trade

4. Government Drivers- Favorable Policies; Support for industries

Benefits of Global Expansion

Larger Markets

Lower Costs

Advanced technologies

Challenges of Global Expansion

-Ethical business concerns

-Organizational structure

-Public Relations

-Leadership

-Legal and regulatory structure

Pros of Globalization

-Economic Growth

-Increased well-being of human society

-increased trade and investment

Cons of Globalization

-Benefits the rich at the expense of the poor

-Job loss in developed countries

-Environmental damage and unethical practices of labor

-Loss of power of local government

Globalization 1.0

1st Stage of globalism started with Columbus's discovery of the New World and continued from 1492 to about 1800 and is pushed forward by nationalism and religion.

Globalization 2.0

2nd stage of globalization 1800 to 2000, was disrupted by the Great Depression and both world wars and was largely shaped by the emerging power of huge MNCs and is characterized by advances in methods of transportation.

Globalization 3.0

3rd stage of globalization began around 2000 and is characterized by advancements across the board, especially technology and communication.

What is the World is Flat Theory by Friedman?

10 factors had influential roles in making the world smaller, but each worked in isolation until, the convergence of three more powerful forces: new software and increased public familiarity with the internet, the incorporation of that knowledge into business and personal communication, and the market influx of billions of people from Asia and the former Soviet Union who want to become more prosperous quickly.

What is the Cage analysis by Ghemawat?

1. Culture: cultural differences between two countries reduce their economic exchange

2. Administration: the greater the administrative differences between nations, the more difficult the trading relationship is to acquire—whether at the national or corporate level.

3. · Geography is perhaps the most clear difference between countries. Generally, as distance goes up, trade goes down, since distance usually increases the cost of transportation.

4. Economics: The most apparent economic difference between countries is size (compared with GDP: a measure of the goods produced and services provided by a country in one year). Another difference is per capita income.

Political systems that impact Globalization-Monarchy

Monarchy

-single person rules until they dies or abdicates the throne.

-claims the rights to the title by hereditary succession or as a result of a religious, or divine, appointment or calling.

-the monarchies of most modern nations are ceremonial remnants of tradition, and individuals who hold titles in such sovereignties are often aristocratic figureheads.

Absolute monarchies-Ex Oman

-absolute or unmitigated power

-most modern are in the Middle East and Africa.

-citizens who live under the reign of an absolute ruler must contend with oppressive or unfair policies that are in place based on the unchecked ideas or political agendas of that leader

Constitutional monarchies-Ex Great Britain;Canada

-Today's common Monarchy

-abide by the laws of a greater constitution.

Most evolved from absolute monarchies.

-feature elected prime ministers run the country; Monarchs have limited authority

Political systems that impact Globalization-Oligarchy

-A small, elite group holds power

-Acheive power due to military, economic or other powers

Ex-Russia

Political systems that impact Globalization-Dictatorship

-Power is held by a single person (or a very small group of people) who wields complete and absolute authority over a government and population.

-Ex Libya

Political systems that impact Globalization-Democracy

-Equal Voice or vote in determining state policy

Which accommodation should an American multinational company make to conduct business in China?

Restrictions of Freedom of Speech

What are the 4 Economic Systems that Impact Globalization

1. Traditional - Centered around family;everyone consumes the same good; relies on bartering; no surplus

2. Command-Controlled by the ruling class; all resources are owned by the government

3. Market- The market controls the dist of resources; no government control

4. Mixed-The market is the major determining power;partial government regulates as needed

What are the 3 Legal Systems that Impact Globalization?

1. Civil Law-The judge applies the law code; inquisitorial system where the investigating judge investigates the facts of the case. Juries are rarely used.

2. Common Law-The judge interprets the law; judges interpret the law, and judicial rulings can set precedent.2 Common law systems are often adversarial because the judge's role is to act as a moderator between two opposing parties. A jury may determine the facts, and a judge decides which law will be applied to the case.

3. Religious Law-based on religious guidelines

Which type of law system is based on a code and focuses on how the law is applied to the facts?

civil law system is an inquisitorial system where the judge investigates the facts of the case.

Which law is based on tradition and precedent given that judicial rulings can stand as precedents for future cases?

common law systems, judges hear arguments from both parties and make a judgment. This judgment stands as precedent for future cases.

Which law system can vary from community to community and is found in countries without strong formal justice systems?

Customary is generally found at the tribal or local level, is based on longstanding local customs, and is often transmitted orally.

In which law system does a judge decide the applicable law for the case as a jury determines the facts?

common law systems, while a jury may determine the facts, a judge decides which law will be applied to the case.

What is Economic globalization?

It is the globalization of production, sales, and finance activities in international markets around the world.

What is an example of competition drivers?

Entering new markets to beat competitors and identifying a market that does not have a lot of competition since it is a fairly new market.

What is one of the concern of outsourcing manufacturing?

Labor can be cheaper in other countries and could lead to job loss in the home country.

Which action could a government take to encourage a company to keep production in the country?

Imposing tariffs on items made in other countries causing them to be more expensive.

Which economic system facilitates the global expansion that uses the law of supply and demand, goods are privately owned, and government interference is minimum.

This applies to the market economy,

Module 2: Shaping the Economic Environment

What is the Role and Influence of the International Monetary Fund (IMF)?

-It oversees the stability of the international monetary system.

-Monitoring economic activity around the globe

-Advising countries to adopt policies that are linked to a stable and growing economy

-Provides technical assistance to help with creating monetary and financial policies and to promote sound fiscal policy and management.

-Makes short term loans to deal with debt and financial crises as well as to correct balance of payment problems and maintain exchange rate stability.

What is the criticisms of the IMF?

-Conditionality causes the citizens of the borrowing country to pay a heavy price.

-IMF policies are significantly impacted by the rich companies.

-Imbalance of voting power

What is the Role and Influence of The World Bank?

-5 constituent institutions aimed at restructuring economies, promoting investment, and reducing poverty.

-Provides long term loans used for development projects.

-Provides economic and technical advice.

-Promotes FDI by facilitating foreign and domestic partnerships

-Offers insurance against noncommercial and political risk.

-Helps resolve disputes related to foreign direct investments (FDI).

What is the criticisms of The World Bank?

-Imbalance in the leadership

-Enforced conditionality causes harm to developing countries.

-Privatization of Healthcare.

-Environmental damage caused by funded projects,

What is the Role and Influence of The World Trade Organization (WTO)?

-Encourages international trade through the lowering of trade barriers.

-Expanded through successive negotiations called "rounds".

-A forum for negotiations to reduce tariff and non-tariff barriers to trade

-Oversees trade agreements and facilitates disputes between member countries.

-Promotes equality among trading partners and works to promote fair competition in the market.

-Provides technical assistance to emerging economies so they can become competitive with more advance economies.

What is the criticisms of The WTO?

-Transparency requirement hurts national sovereignty.

-The trade rules protect developed countries more than developing countries.

-The MFN rule give MNCs an unfair advantage.

-Agriculture product subsidy hurt developing countries.

-The WTO has refused to address the impacts of free trade on labor rights.

-Has been ignoring environmental concerns.

Module 3: International Agreements

What is Mercantilism Trade Theory?

Can only gain with a trade surplus-more export/less import ("I sold more goods to the rest of the world than I bought from the rest of the world, so I win with trade") Gold and Silver are important to a country's wealth. An economic system where the government regulates trade for its own benefit at the expense of its rivals.

What is Neo-mercantilism?

Modern day thinking-Countries promote a combination of protectionist policies and restrictions and domestic industry subsidies.

What is Absolute Trade Theory?

When a country can produce more of one item than another one. Specialization determined by absolute advantage to increase production efficiency.

What is Comparative Advantage Trade Theory?

-Limited resources lead to opportunity cost.

-Lower opportunity cost determines comparative advantage.

-Ex Brazil is giving up fewer opportunities that the US to produce coffee and the US has a lower opportunity cost for producing corn, than Brazil. What should they do?

What is H-O Theory (factor propositions)?

-Factors of production: Labor, Land, natural resources, capital and technology.

-Ex. States that the reason Brazil is better with coffee and the US with corn is because of what we have to work with in each country.

What is Country Similarity Theory?

-Firm based theory that incorporate other product and service factors into the understanding of trade flows.

-Consumers in countries that are in the same or similar stage of development would have similar preferences.

-Companies first produce for domestic consumption. When they explore exporting, companies often find that markets that look similar to their domestic one, in terms of customer preferences, offer the most for potential success.

What is Global Strategic Rivalry Theory?

-focuses on firm's competitive advantage

-Barriers to entry

Why do countries trade?

-Trade creates win win situation for both exporting and importing countries

-Trade promotes economic development and increase living standard

-Specialization and economies of scale

What is the Characteristics of Trade Agreements?

Treaties-must be approved by the Senate with a 2/3 vote

Trade Agreements-Must be approved by both the US Senate and the house

Promote trade through International Groups-Ex The GATT and The WTO

-Regional Economic Integrations

What is the Impact of Trade?

-With free trade:

-Possible job loss in certain industries

-Trade affects Wages

-Labor standards and working conditions are concerned

How does the government limit trade?

Trade barriers:

tariffs-A tax or duty to be paid on a particular class of imports or exports

quotas-A limited quantity of a particular product that can be produced, exported, or imported under official controls

What are the types of Tariffs

-Import tariffs-Taxes on goods that are imported into a country

-Export tariffs-Taxes on goods leaving a country

-Protective tariffs-protect a domestic industry by making imported goods more expensive than equivalent goods produced domestically

-Revenue tariffs-levied to raise revenue for the government

-Specific tariffs-Import taxes expressed in an amount of money per unit imported

-Ad valorem tariffs-Import taxes based on a fixed percentage of the assessed commercial value of imported goods

-Compound tariffs-Taxes on imported goods that are a combination of a fixed amount and an amount based on the value of the goods

What are the types of Quota?

absolute quota-strictly limits the quantity of goods that may enter a country

tariff-rate quota-permits a specified quantity of imported goods to enter a country at a reduced rate during the quota period

What are reasons for limiting trade?

-Sanctions

-dumping-When a country or company exports a product at a price that is below market price to gain an unfair share of the market

-Infant Industry Argument

-Health and Safety

Module 4: Relationships, Foreign Investment, and Trade

What is FDI?

Primary a long-term strategy of investing in a foreign market through direct involvement in the operations of a company, either by acquisition or partnership or by creating a new business

What is a portfolio investment?

An investment in another country is purely financial and does not involve any management responsibility

Why do governments promote FDI?

-Expand their domestic economy

-attract new technologies, business knowledge, and capital

Why do governments restrict FDI?

-Protect local industries and critical resources (petroleum, minerals, metals)

-Preserve national and local culture

-Maintain political and economic independence and control economic growth

What are the benefits of FDI?

An inflow of capital can benefit both the global and host country economy.

-Increased jobs and reduced poverty

-Improved human capital development

-increased tax revenues

Invested capital goes to businesses with the highest potential for growth.

Investors can decrease their risk by diversifying.

Investing capital in firms can lead to growth and subsequently increased jobs.

What are the drawbacks of FDI?

Foreign ownership of strategically important industries could lower the competitive advantage of the nation (petroleum).

Foreign investors could also take advantage of the company they are investing in and take away all valuable assets then leave the country (mining).

Job losses to host countries that have cheaper labor cost.

How governments promote FDI?

-Financial Incentives: provide a combination of insurance, loans, and tax breaks.

-Improve or enhance local infrastructure

-By reducing bureaucracy and regulatory requirements

-Human capital development: Improve their workforce through education and job training

-Reduce uncertainty: reassure businesses that the local operating conditions are stable, transparent (i.e., policies are clearly stated and in the public domain), and unlikely to change.

-

What are the types of FDI?

1. Horizontal FDI: When a company is trying to open a new market-a retailer, for ex, that builds a store in a new country to sell to the local market.

2. Vertical FDI: when a company invests internationally to provide input into its core operations-usually in its home country.

-backward vertical FDI: when a firm brings the goods or components back to its home country (ex acting as a supplier)

-forward vertical FDI: when a firm sells the goods or components in the local or regional market (ex acting as a distributor)

3. greenfield-A new business built where no prior business existed, either physically or metaphorically or both

4. Brownfield-when MNC enter into host countries by purchasing or leasing existing facilities

What are Multinational Corporations (MNC)?

A company that operates in two or more countries. Corporations that move resources, goods, services, and skills across national boundaries without regard to the country in which their headquarters are located

What is the fundamental force that generates international trade?

a. the sea rule

b. absolute advantage

c. comparative advantage

d. the need for more goods and services

c. comparative advantage

A specified maximum amount of the good that may be imported in a given period of time is called what?

a. tariff

b. quota

c. sanction

d. dumping limit

b. quota

If the United States starts to import a good that the US is currently producing, what will happen to the market price of the good in the United States?

a. Increase

b. Decrease

c. No change

b. Decrease

The U.S. government has decided to impose trade barriers for cars imported from Japan. What will be the impact of this decision?

a. The impact on the Japanese economy will be negative because wages in the Japanese auto industry will increase.

b. The impact on the U.S. economy will be negative in comparison to free trade because U.S. consumers will face higher prices.

c. The impact on the U.S. economy will be positive in comparison to free trade because countries will be able to enjoy a variety of goods.

d. The impact on the Japanese economy will be positive in comparison to free trade because Japanese employment in the auto industry will increase.

b. The impact on the U.S. economy will be negative in comparison to free trade because U.S. consumers will face higher prices.

The Canadian government is considering applying tariffs on milk imported from the U.S. Who will benefit from this policy? Choose 2 answers

a. U.S. customers

b. U.S. producers

c. Canadian producers

d. Canadian government

c. Canadian producers

d. Canadian government

If a tariff is imposed on imports of shrimp into the United States, what are the effects on U.S. consumers and U.S. producers?

a. US consumers gain; US producers gain

b. US consumers gain; US producers lose

c. US consumers lose; US producers gain

d. US consumers lose; US producers lose

c. US consumers lose; US producers gain

In his first State of the Union address, President Biden pledged that the United States government would "buy American" when spending federal money on infrastructure and other purchases. What is likely to happen because of this policy?

a. US producers of these goods will be helped.

b. US consumers of these goods will be helped.

c. Foreign producers of these goods will be helped.

d. US government will be able to collect more taxes.

a. US producers of these goods will be helped

In response to trade barriers in the United States for sugar from Brazil, the Brazilian government decides to impose trade restrictions on wheat imported from the United States. What would happen if these two trade barrier policies were applied against each other? Choose 2 answers

a. Both the U.S. and Japanese governments will benefit.

b. This policy will benefit both U.S. and Brazilian customers.

c. Brazilian wheat producers and U.S. sugar producers will benefit.

d. Brazilian sugar producers and U.S. wheat producers will be hurt.

e. Prices of wheat in Brazil will go down, but the price of sugar in the United States will go up.

c. Brazilian wheat producers and U.S. sugar producers will benefit.

d. Brazilian sugar producers and U.S. wheat producers will be hurt.

Why would the national security argument against free trade be used?

a. to increase imports as a way of strengthening their country.

b. to limit exports to control the flow of technology to third world nations.

c. to increase exports as a way of earning money to strengthen their country.

d. to limit imports that compete with domestic producers important for national defense.

d. to limit imports that compete with domestic producers important for national defense.

Dumping falls under which of the following arguments against free trade?

a. Infant industry

b. National security

c. Unfair competition

d. Protection as a bargaining chip

c. Unfair competition

How is a developing country likely to be affected when it received foreign direct investment (FDI)?

a. Real GDP will increase.

b. Tax revenue will decrease.

c. Unemployment rate will increase.

d. FDI does not affect a developing country.

a. Real GDP will increase.

Carrier and some other companies in Indiana moved their production facilities overseas. What would happen as a result of this move? Choose 2 answers

a. The foreign companies would make more profits.

b. The U.S. would experience higher unemployment.

c. U.S. producers would be able to pay lower wages abroad.

d. The foreign countries would experience an economic slowdown.

b. The U.S. would experience higher unemployment.

c. U.S. producers would be able to pay lower wages abroad.

Organized labor has generally _____________ immigration because it wants to protect jobs for U.S. citizens, especially during and after a _________________.

a. Opposed; Recession

b. Opposed; Expansion

c. Supported; Recession

d. Supported; Expansion

a. Opposed; Recession

On a bank's balance sheet, which are part of the banks assets?

a. reserves

b. deposits

c. both deposits and reserves

d. neither deposits or reserves

a. reserves

What is true of a bank in a fractional-reserve banking system?

a. It does not make loans.

b. It does not accept deposits.

c. It only makes fractional loans.

d. It keeps only a fraction of its deposits in reserve.

d. It keeps only a fraction of its deposits in reserve.

A bank has a 12 percent reserve requirement, $5,000 in deposits, and has loaned out all it can given the reserve requirement.

a. It has $0 in reserves and $5,000 in loans.

b. It has $60 in reserves and $5,940 in loans.

c. It has $600 in reserves and $4,400 in loans.

d. It has $4,400 in reserves and $600 in loans.

c. It has $600 in reserves and $4,400 in loans.

The reserve requirement is 8%. Lucy deposits $500 into a bank. By how much do excess reserves change?

a. $40

b. $80

c. $460

d. $500

c. $460

What is the money multiplier if the reserve ratio is 5 percent?

a. 2

b. 5

c. 10

d. 20

d. 20

What is the discount rate?

a. The rate banks charge the Fed for loans.

b. The rate the Fed charges banks for loans.

c. The rate the Fed charges Congress for loans.

d. The rate banks charge one another for loans.

b. The rate the Fed charges banks for loans.

What is the interest rate that banks charge each other for short term loans?

a. prime rate

b. discount rate

c. federal funds rate

d. reserve requirement

c. federal funds rate

What is the Fed's primary tool to change the money supply?

a. redeeming Federal Reserve notes

b. changing the reserve requirement

c. conducting open market operations

d. changing the interest rate on reserves

c. conducting open market operations

What happens when there is a decrease in the money supply?

a. Reserves increase and the federal funds rate increases

b. Reserves increase and the federal funds rate decreases

c. Reserves decrease and the federal funds rate decreases

d. Reserves decrease and the federal funds rate increases

d. Reserves decrease and the federal funds rate increases

What does an open-market purchase do?

a. increases the number of dollars and the number of bonds in the hands of the public

b. decreases the number of dollars and the number of bonds in the hands of the public

c. decreases the number of dollars in the hands of the public and increases the number of bonds in the hands of the public

d. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public

d. increases the number of dollars in the hands of the public and decreases the number of bonds in the hands of the public

In a fractional-reserve banking system, what is the effect of a decrease in reserve requirements?

a. increases both the money multiplier and the money supply

b. decreases both the money multiplier and the money supply

c. decreases the money multiplier, but increases the money supply

d. increases the money multiplier, but decreases the money supply

a. increases both the money multiplier and the money supply

What will banks do if the Fed decreases the discount rate?

a. borrow more from the Fed and lend more to the public, increasing the money supply

b. borrow more from the Fed and lend less to the public, decreasing the money supply

c. borrow less from the Fed and lend more to the public, increasing the money supply

d. borrow less from the Fed and lend less to the public, decreasing the money supply

a. borrow more from the Fed and lend more to the public, increasing the money supply

If the public decides to hold less currency and deposits more in banks, bank reserves

a. decrease and the money supply eventually decreases.

b. decrease but the money supply does not change.

c. increase and the money supply eventually increases.

d. increase but the money supply does not change.

c. increase and the money supply eventually increases.

A change in which of the following will shift the money demand curve?

a. Price level

b. Discount rate

c. Money supply

d. Federal funds rate

a. Price level

Read the following prior to answering questions >>>

Stanley & Sons is based in the United States and produces performance fabrics that are used in the construction industry. Its products have been revolutionary for enabling construction companies to build highways in mountainous areas, mostly in the U.S. and Canada. The company was started 15 years ago in North Carolina by Jack Stanley and his two sons.

For the past two years, the growth of their company has encouraged them to think about restructuring in order to meet increasing demand for their products. Currently, the company produces 10 types of fabrics that help with soil erosion, which is a by-product of highway construction. The processes used to manufacture the different types of fabric are mostly the same, and Jack and his sons handle most of the business decisions. The company employs 50 workers on the production floor that is overseen by Jack and his sons. Because everything funnels through Jack and his sons, they are feeling overwhelmed, and the company is not being as efficient as it needs to be. Stanley & Sons wants to departmentalize employees into functions.

In addition to figuring out the best organizational structure, Stanley & Sons is contemplating which steps to take to grow the company outside of the U.S. and Canada. Stanley & Sons is thinking about starting up a new manufacturing facility in Germany and is considering using a centralized decision-making method at that location. They are not sure if they should incur large amounts of debt in order to open a facility in Germany or if they should go in a different direction. They believe that providing their products to construction companies in Germany will lead to further international growth. Stanley & Sons is considering using an international standardization business strategy.

Q1: Which organizational structure is appropriate for forming the departments for Stanley & Sons?

A. Teams

B. Matrix

C. Functional

D. Divisional

C. Functional

Based on the fact that manufacturing processes are the same and they want to departmentalize employees into functions, a functional structure would be the best fit.

Q2: Which structure is Stanley & Sons using to control the structural hierarchy at a low level?

A. Functional structure

B. Tall structure

C. Matrix structure

D. Flat structure

D. Flat structure

The flat structure controls the hierarchy at a low level with only a few layers between frontline employees and the top level.

Q3: What is an advantage of using the decision-making method proposed for a facility in Germany?

A. Operations would be customer-centered.

B. Employees would feel empowered.

C. Decision-making processes would be consistent.

D. Business would be flexible to meet local needs.

C. Decision-making processes would be consistent.

An advantage of a centralized decision-making method is consistency across different international divisions.

Q4: Which business strategy should Stanley & Sons use to meet goals if leaders choose not to create an international division in Germany but they would still like to serve German customers?

A. Transnational

B. Export

C. Standardization

D. Multidomestic

B. Export

This strategy would be used by Stanley & Sons if leaders decided to focus on their production facility in North Carolina.

Q5: What is the effect on global integration and local responsiveness if Stanley & Sons chooses to use an international standardization business strategy?

A. Low global integration and high local responsiveness

B. High global integration and high local responsiveness

C. Low global integration and low local responsiveness

D. High global integration and low local responsiveness

D. High global integration and low local responsiveness

This combination of the two would represent a standardized strategy.

Read the following prior to answering questions >>>

A high-growth, multinational biotechnology company headquartered in the U.S. with subsidiaries in Belgium and France wants to expand its global operations to three new European countries in two years. The CEO located in the U.S. has been tasked with securing funding for the expansion and has signed a contract with a venture capital group that specializes in highly speculative biotechnology investments in return for having significant ownership and control over the company's business decisions. One of the major decisions for the multinational company and its venture capital investors is choosing its new markets. After evaluating the feasibility of operating in a country known for believing biotechnology interferes with the sanctity of human life (referred to as Market X), the CEO and investors opt not to pursue that market.

During market evaluations, the research manager in the subsidiary in France requests the purchase of equipment from a dealer in Germany. The CEO enters into an agreement to guarantee the currency rates for a buy-and-sell transaction on two separate dates after the equipment has been delivered to the subsidiary in France, locking in the currency exchange rates for both transactions. The U.S. headquarters pays for all equipment, regardless of delivery location, without charging the subsidiaries.

After six months, the CEO and investors decide on three new markets in which to build subsidiaries. The investors decide to implement a new business model for the three new markets in which each subsidiary will play a different role in production. Market A will design the product, Market B will manufacture the product, and Market C will assemble the product and sell it globally. When the product moves between Markets A, B, and C, each subsidiary will sell the product to the next subsidiary.