The CEO of Jamil Circuits is unhappy with the firm's choice of wholly owned subsidiaries as the mode of foreign entry.He has pointed out a number of disadvantages to this mode.However,the CFO of the company is not sure if all of the disadvantages that the CEO is noting are correct.Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?

Question

Quizplus · Accepted Answer

Wholly owned subsidiaries involve high costs and risks as the parent company has to finance the foreign operations entirely and also bear the risks associated with it. The other disadvantages listed such as lack of control over quality, problems with local marketing agents, inability to engage in global strategic coordination, and lack of control over technology do exist, but they are not the primary disadvantage of this mode of entry.

The CEO of Jamil Circuits Is Unhappy with the Firm's