Which Entry Mode Gives a Multinational Company the Tightest Control

question 10

Multiple Choice

Which entry mode gives a multinational company the tightest control over foreign operations?

• A) Exporting from the home country and letting a foreign agent organize local marketing
• B) Licensing
• C) Franchising
• D) Entering into a joint venture with a foreign company to set up overseas operations
• E) Setting up a wholly owned subsidiary

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Definitions:

Residual Income

Income that remains after all costs of capital have been deducted from net operating income, a measure of profitability.

Division

A distinct part of a larger company that operates semi-independently, typically focusing on a particular product line or market sector.

ROI Calculations

The process of determining the return on investment by dividing the net profit by the initial cost of the investment.

Margin

The difference between the selling price of a good or service and the cost of producing it, often expressed as a percentage of the selling price.