Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?
A) Foreign firms find it difficult to maintain control over how their technological know-how is used.
B) Foreign firms cannot use profits earned in one country to support competitive attacks in another.
C) Foreign firms tend to have short-term commitments in the foreign market.
D) Foreign firms cannot realize substantial experience curve and location economies.
E) Foreign firms must bear the full capital costs and risks of setting up overseas operations.

Question

Quizplus · Accepted Answer

Wholly owned subsidiaries require the foreign firm to bear the full costs and risks of establishing operations in a foreign market, which can be a significant disadvantage compared to other modes of entry such as licensing or joint ventures.

Which of the Following Is a Disadvantage of Wholly Owned