Concern about the ability of independent foreign firms to maintain product quality:
A)often results in the formation of a license agreement between a foreign firm and an MNE.
B)makes licensing firms in the foreign markets preferable to FDI.
C)is an inherent disadvantage faced by the multinationals.
D)makes FDI preferable to licensing firms in the foreign markets.

Question

Quizplus · Accepted Answer

The concern about the ability of independent foreign firms to maintain product quality makes FDI preferable to licensing firms in the foreign markets. This is because in FDI the multinational has complete control over the production process, including quality control, whereas in licensing they have to rely on the foreign firm's ability to maintain quality standards.

Concern About the Ability of Independent Foreign Firms to Maintain