Diacon Products manufactures and sells a wide variety of complex electronic products.Diacon Products wants to enter foreign markets and is deciding on a mode of entry.Vice President of Manufacturing,Brooke Monroe,is making a strong push for a turnkey project.Which of the following is an advantage of turnkey projects as a mode of entry into foreign markets that would help Brooke Monroe make her case?
A)It is an ideal way to gain entry into a country where FDI is not limited by government regulations.
B)It is a useful strategy to earn great returns from the know-how of a technologically complex process.
C)It is an ideal way to establish a firm's long-term presence in a foreign country.
D)It helps protect a firm's competitive advantage.
E)The firm that enters into a turnkey project with a foreign enterprise avoids giving rise to potential competitors.

Question

Quizplus · Accepted Answer

Turnkey projects involve transferring the technical know-how of a complex process to a foreign firm, and then taking a hands-off approach as the foreign firm designs, constructs, and manages the facility. This mode of entry allows the firm to earn great returns from the specialized knowledge it possesses without having to invest its own resources in building and operating a facility in a foreign country. Therefore, Brooke Monroe can argue that a turnkey project will allow Diacon Products to leverage its technological expertise to earn high returns while minimizing risk and investment in foreign markets.

Diacon Products Manufactures and Sells a Wide Variety of Complex