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NEW QUESTION: 1
An advantage of a direct investment strategy when entering a foreign market is
A. Assurance of access when the foreign country imposes domestic content rules.
B. Avoidance of interaction with the local bureaucracy.
C. Reduction in the capital at risk.
D. Shared control and responsibility.
Direct investment has many advantages:
cheaper materials or labor,
receipt of investment incentives from the host government,
a strong relationship with interested parties in the host country,
control of the investment,
a better image in the host country,
market access when domestic contest rules are in effect. However, direct investment is risky because of exposure to currency fluctuations, expropriation, potentially high exit barriers, and restraints on sending profits out of the country.
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