A major disadvantage of operating a wholly owned subsidiary is that
A)a loss of control over technology is likely to occur.
B)a wholly owned subsidiary offers too much flexibility over operations.
C)high costs and risk are associated with this type of operation.
D)overseas consumers are often resentful of foreigners.
E)host countries can impose higher tariffs on the firm.

Question

Quizplus · Accepted Answer

Operating a wholly owned subsidiary involves high costs and risk as the parent company is responsible for all aspects of the subsidiary's operations. This includes investment, management, and staffing. Additionally, the subsidiary operates in a foreign country, making it subject to additional legal, regulatory, and cultural challenges. These factors can increase the costs and risks associated with operating a wholly owned subsidiary.

A Major Disadvantage of Operating a Wholly Owned Subsidiary Is