Which of the Following Is a Major Disadvantage of Direct

question 21

Multiple Choice

Which of the following is a major disadvantage of direct investment for the domestic company?

• A)The returns are lesser as compared to exporting.
• B)Generally, the firm finds it difficult to develop a deeper relationship with the government or customers.
• C)The firm eventually loses control over the investment.
• D)The firm faces many risks such as falling markets or government changes.
• E)Due to a lack of control, the firm is unable to develop marketing policies that serve its long-term international objectives.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in an open market.

Opportunity Cost

The expense incurred from not choosing the optimal alternative available during decision-making.

College Tuition

The fee that institutions of higher education charge for enrollment and instruction.

Forgone Income

Potential earnings not received by choosing one alternative over another, often considered in opportunity cost calculations.