If WRSX Decides to Enter New Markets, It Will Need

question 2

Multiple Choice

If WRSX decides to enter new markets, it will need to consider which entry mode to choose. Which TWO of the following statements about entry modes is correct?

• A) A wholly owned subsidiary in a 'greenfield' start up operation would be the lowest risk option.
• B) A joint venture with a local partner would enable the company to tap into the partner's cultural know-how, linkages and reputation.
• C) A wholly owned subsidiary would be suitable in markets where the agency has broad competitive advantages that can easily be transferred to the new markets.
• D) Franchising or licensing of the agency's brand name to a local firm is a high cost/high risk option which should only be used in exceptional circumstances.

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price-taking behavior.

Profit-Maximizing Output

The level of production at which a firm achieves the highest possible profit, determined by where marginal cost equals marginal revenue.

Revenue

The total income generated by a business from its normal business activities, such as sales of goods or services, before any expenses are deducted.

Cost

The value of everything that is consumed to produce a good or service, including materials, labor, and other expenses.