Once a firm knows that foreign demand exists, its next step is to
A) use foreign direct investment.
B) negotiate a licensing agreement with the foreign government.
C) cease operations in its home country.
D) ascertain the lowest-cost method of supplying goods abroad.

Question

Quizplus · Accepted Answer

Once a firm knows that foreign demand exists, the next logical step is to identify the most cost-effective mode of exporting. This could involve direct exports, contracting with intermediaries, or establishing a branch or subsidiary in a foreign market. Therefore, ascertain the lowest-cost method of supplying goods abroad would be the best answer. Options A and B are higher cost alternatives, and option C is not a viable solution if the firm wants to expand its business.

Once a Firm Knows That Foreign Demand Exists, Its Next