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Companies That Engage in Exporting and Importing Often Reach a Point

Question 8

Multiple Choice

Companies that engage in exporting and importing often reach a point where more direct foreign involvement is seen as a viable alternative with significant benefits to the company. Some of the reasons this evolution takes place include all except which of the following?


A) Doubts arise about the foreign agent's or distributor's diligence in looking after the best interest of the company.
B) To be effective, the company often has to share sensitive competitive information with the foreign partner, and this creates the possibility that the foreign partner will become a competitor in its own home market or elsewhere.
C) The low fixed costs and high variable costs associated with exporting and importing may not allow the company to squeeze out as much profit from a product line as would be possible with more active foreign involvement, particularly after a few years and foreign sales reach a high sustainable level.
D) Increasing familiarity with foreign markets and the way people do business in other countries leads to increased confidence that the company can succeed on its own in many places.
E) All of the statements above are correct.

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