As a firm changes its global market entry strategy from exporting to direct investment, all of the following increase except

Question

Quizplus · Accepted Answer

As a firm changes its global market entry strategy from exporting to direct investment, divestiture should decrease. This is because direct investment involves establishing a more permanent presence in the foreign market, whereas exporting involves less of a commitment. In other words, if a firm decides to invest directly in a foreign market, it is less likely to divest its assets than if it were simply exporting its products. Therefore, choice C is the correct answer.

The other choices are not valid because:
A) Marketing control should increase with direct investment as the firm will have more control over its marketing efforts in the foreign market.
B) Risk should increase with direct investment as the firm will be taking on more financial and operational risk by establishing a presence in the foreign market.
D) Profit potential should increase with direct investment as the firm will have more opportunities to capture market share and generate revenue in the foreign market.
E) Financial commitment should increase with direct investment as the firm will need to invest more resources into establishing its presence in the foreign market.

As a Firm Changes Its Global Market Entry Strategy from Exporting