Establishing a Subsidiary in a Foreign Market to Take Advantage

question 10

Multiple Choice

Establishing a subsidiary in a foreign market to take advantage of all essential value chain activities requires a strategy that

• A) establishes a wholly owned subsidiary.
• B) acquires a foreign company.
• C) supports direct control over all aspects of operating in a foreign market.
• D) establishes a start-up operation.
• E) All of these.

---

Definitions:

Total Contribution Margin

This refers to the total amount of revenue left over after deducting all variable costs, indicating the total contribution towards covering fixed costs and generating profit.

Break-even Point

The point at which total revenue equals total costs, resulting in no profit or loss for the business.

Sales Mix

The combination of different products or services that a company sells, which impacts the overall profitability.

Contribution Margin Ratio

A ratio that measures the percentage of sales revenue available to cover fixed expenses and generate profit, calculated as the contribution margin divided by sales revenue.