Which of the Following Is One of the Limitations of Exporting

question 37

Multiple Choice

Which of the following is one of the limitations of exporting that leads companies to prefer FDI over exporting?

• A)The presence or threat of trade barriers
• B)The costs of acquiring a foreign enterprise
• C)The costs of establishing production facilities in a foreign country
• D)The risk of giving away valuable technological know-how to a potential foreign competitor
• E)The possibility of diminishing returns

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Definitions:

Price Skimming

A pricing strategy involving setting an initially high price before gradually lowering it over time as the product's novelty wears off.

Price Discounting

A strategy of reducing the selling price of goods or services to attract customers or drive sales volume.