High transportation costs and tariffs imposed on imports help explain why many firms prefer __________ over __________ for international expansion.
A) foreign direct investment, licensing
B) exporting, foreign direct investment
C) foreign direct investment, exporting
D) exporting, licensing

Question

Quizplus · Accepted Answer

High transportation costs and tariffs make exporting less attractive, while foreign direct investment allows a firm more control over their operations and supply chain, potentially mitigating these costs. Licensing does not address these issues, as it involves granting a foreign firm the right to use the company's intellectual property in exchange for royalties, and does not involve physical production or operations.

High Transportation Costs and Tariffs Imposed on Imports Help Explain