The key factors that are important in a firm's decision to invest overseas are:
A) Trade barriers, perfect labor market, and tangible assets.
B) product integration, product life cycle, and shareholder unification services.
C) profit maximization, global prestige, and competition.
D) Trade barriers, imperfect labor market, intangible assets, vertical integration, product life cycle, and shareholder diversification.

Question

Quizplus · Accepted Answer

The key factors that are important in a firm's decision to invest overseas are trade barriers, imperfect labor market, intangible assets, vertical integration, product life cycle, and shareholder diversification. Trade barriers, such as tariffs and quotas, can make it difficult for a company to export its products to a foreign market, leading to a decision to invest directly in that market instead. The availability of a less perfect labor market may provide access to cheaper labor or specialized skills not available domestically. Intangible assets such as patents, trademarks, and brand names can also provide a competitive advantage by distinguishing a firm's products from those of its competitors. Vertical integration involves controlling the entire production process from raw materials to finished products, which may reduce costs and increase efficiency. The product life cycle also plays a role in a firm's decision to invest overseas, as an investment in a foreign market may be necessary to maintain sales growth. Finally, shareholder diversification may be a factor in a firm's decision to invest overseas, as it may spread the risk associated with investing in a single market.

The Key Factors That Are Important in a Firm's Decision