Which method of entering a foreign market carries with it the most risk?

Question

Quizplus · Accepted Answer

Direct ownership involves a company setting up its own subsidiary in a foreign market, which is a high-risk strategy because the company has to take on all of the risks and costs associated with the venture. This includes navigating complex legal and regulatory environments, managing cultural differences and language barriers, and understanding local consumer preferences and behaviors. Additionally, direct ownership requires a significant investment of capital and resources, which means that if the venture fails, the company may suffer significant financial losses. In contrast, exporting, licensing, joint ventures, and contract manufacturing all involve lower levels of risk because the company is either working with established partners or maintaining a limited presence in the foreign market.

Which Method of Entering a Foreign Market Carries with It