When a Firm Establishes a Presence in the Foreign Market

question 26

Multiple Choice

When a firm establishes a presence in the foreign market by investing capital in and securing ownership of a factory, subsidiary, or other facility there, it is typically a(n) ________.

• A) equity-based international business activity
• B) contractual relationship
• C) home-based international exchange activity
• D) inbound international exchange activity

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Definitions:

Originator's Profits

The earnings generated by the creator or initial producer of a product or service, typically before any secondary market involvement.

Innovation

The act of introducing something new or making improvements to existing products, services, methodologies, or technologies.

Widespread Diffusion

The broad and extensive spread of something, such as a technological innovation or cultural idea, across a wide area or among a large number of people.

Oligopolists

Firms or entities that are part of an oligopoly, a market dominated by a small number of large suppliers, leading to limited competition.