A Clear Advantage of Wholly Owned Subsidiary as a Preferred

question 49

Multiple Choice

A clear advantage of wholly owned subsidiary as a preferred entry mode,particularly when a firm's competitive advantage is based on technological competence,will often be because it:

• A)reduces the risk of losing control over that competence.
• B)benefits from the host country's competitive conditions.
• C)increases control of the development costs and risks of working in a foreign market.
• D)maintains control over the capital necessary to get the overseas operation going.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive.

Profit Sharing

An incentive program that grants employees a share in the company's profits as part of their compensation.

Expected Profits

The anticipated financial gain from an investment or business activity, calculated by multiplying possible outcomes by their probabilities and summing the results.

Cost Function

Function relating cost of production to level of output and other variables that the firm can control.