Answered: Which of the following, if true,…

Understanding Business

12th Edition

ISBN:9781259929434

Author:William Nickels

Publisher:William Nickels

Chapter1: Taking Risks And Making Profits Within The Dynamic Business Environment

Section: Chapter Questions

Problem 1CE

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Question

CellCorp, a Canadian MNE, is the designer, maker, and marketer of an increasingly popular Smartphone. After developing a strong market presence in its home market as well as the United States, CellCorp is now interested in selling its products in Mexico and Brazil.

Expanding operations from well-established Canada and United States into fast-growing, emerging markets poses many operational challenges. Presently, the matter of how best to price its product drives discussion given the different regulatory systems, income levels, and consumption patterns in Mexico and Brazil versus those in the United States and Canada.

Thus far, analysis indicates that CellCorp's phones must sell for a higher price in Mexico and Brazil than they presently do in the Canadian and American markets if the company is to hit its profit targets.

Which of the following, if true, weakens the argument for a higher price than what current customers are charged?

A) Research shows that Brazilian consumer spending on electronics is increasing.

B) The Brazilian government charges significant tariffs on all imported consumer electronics and communication devices.

C) Brazilian consumers do not perceive CellCorp’s offerings as premium products.

D) The affluent segment of the Brazilian market has increased steadily over the years.

E) CellCorp was accused of dumping when it sold its products for cut-rate prices in the United States

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