FIGURE 7-7
-When Nestlé actually owns a subsidiary or division in a foreign country, such as when it established its own ice cream manufacturing operation in China (see Figure 7-7 above), this global market entry strategy is known as __________ and represents the greatest commitment a company can make.
A)licensing
B)local assembly
C)a joint venture
D)direct investment
E)local manufacturing

Question

FIGURE 7-7 
-When Nestlé actually owns a subsidiary or division in a foreign country, such as when it established its own ice cream manufacturing operation in China (see Figure 7-7 above), this global market entry strategy is known as __________ and represents the greatest commitment a company can make.
A)licensing 
B)local assembly 
C)a joint venture 
D)direct investment 
E)local manufacturing

Quizplus · Accepted Answer

Direct investment is the strategy in which a company establishes its own subsidiary or division in a foreign country, representing the greatest commitment a company can make. This is the case with Nestlé in China, where it established its own ice cream manufacturing operation. Licensing involves granting another company the right to use your intellectual property in exchange for royalties or other compensation. Local assembly involves importing components and assembling products locally, while local manufacturing involves setting up a manufacturing facility in a foreign country. A joint venture involves partnering with another company to jointly own and operate a business in a foreign country.

FIGURE 7-7 -When Nestlé Actually Owns a Subsidiary or Division in a Division