Why Does a Multinational Firm Have to Go for Direct

question 10

Essay

Why does a multinational firm have to go for direct foreign investment instead of licensing a local firm to carry out production on its behalf?

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Definitions:

Net Sales

The net income from sales a business secures, after subtracting the expenses for returned products, allowances for damaged or missing merchandise, and any granted discounts.

Cost of Goods Sold

Cost of goods sold represents the direct expenses related to the production of goods that a company sells, including materials and labor.

Gross Profit Rate

A financial metric indicating the proportion of money left from revenues after accounting for the cost of goods sold.

Sales Revenue

The gross revenue of a company refers to the entire sum of income derived from selling products or services before deducting any costs.