A new management has been formed at Griod Tech after the company overcame a severe financial crisis. Most of the members of the management feel that the company should expand to overcome the losses incurred. It believes that it should enter the foreign market in the form of a wholly owned subsidiary. However, the Director of Griod Tech, Harry, feels otherwise and considers this option to be a risky endeavor. Which of the following justifies Harry's viewpoint?
A) The company will be unable to maintain a tight control over its foreign operations.
B) The company will need to split revenues if it wants to use the profits made in one market to develop another market.
C) The company will not be able to learn directly from the local market where it wishes to enter.
D) The company will have to bear initial costs and establish distribution entirely by itself.

Question

Quizplus · Accepted Answer

Establishing a wholly owned subsidiary in a foreign market involves significant initial investments and operational challenges, including setting up distribution networks, which can be risky for a company recovering from financial difficulties.

A New Management Has Been Formed at Griod Tech After