A firm will favor FDI over exporting as an entry strategy when
A) the costs of establishing production facilities are high.
B) the transportation costs or trade barriers are high.
C) there are problems associated with doing business in a different culture.
D) the products involved have a high value-to-weight ratio.
E) the firm wants to occupy a position that falls inside the efficiency frontier.

Question

Quizplus · Accepted Answer

When transportation costs or trade barriers are high, exporting becomes less attractive, making FDI a more favorable option for entering a foreign market.

A Firm Will Favor FDI Over Exporting as an Entry