Asked by Derek Vowles on May 22, 2024
Verified
Of the five strategies for entering new markets, direct investment creates the
A) least investment cost.
B) greatest potential risk.
C) most franchisee control.
D) best opportunity for strong strategic alliances.
E) greatest coordination of efforts of global and local partners.
Direct Investment
The purchase of a substantial stake in a foreign company or the establishment of business operations in a foreign country, such as a factory or other facility.
Greatest Potential Risk
Refers to the highest level of uncertainty or danger that could impact the success or existence of a project or investment.
- Recognize the economic and risk considerations involved in the choice of market entry strategies.
Verified Answer
KP
Karan PatelMay 29, 2024
Final Answer :
B
Explanation :
Direct investment involves a high level of investment and greater potential risk compared to the other entry strategies, such as exporting or licensing. This is because the company is establishing its own operations in a foreign market, which requires significant financial and managerial resources.
Learning Objectives
- Recognize the economic and risk considerations involved in the choice of market entry strategies.