According to the text,a firm will favor FDI over exporting as an entry strategy when:
A)the costs of establishing production facilities are high.
B)the transportation costs or trade barriers are high.
C)there are problems associated with doing business in a different culture.
D)products with a high value-to-weight ratio are involveD.

Question

Quizplus · Accepted Answer

The viability of an exporting strategy is often constrained by transportation costs and trade barriers.When transportation costs are added to production costs,it becomes unprofitable to ship some products over a large distance.The desire to reduce the threat that trade barriers might be imposed is enough to justify foreign direct investment as an alternative to exporting.

According to the Text,a Firm Will Favor FDI Over Exporting