To diversify internationally for the purpose of reducing risk, which strategy is appropriate?
A) Establish subsidiaries in markets whose business cycles are the same as those where existing subsidiaries are based.
B) Establish a subsidiary in a market that has relatively low cost of labor or land.
C) Establish a subsidiary in a market where the local currency is weak but is expected to appreciate over time.
D) Establish subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based.

Question

Quizplus · Accepted Answer

Diversification is all about reducing risk, and the best way to achieve this is by spreading investments across different markets, industries, and currencies. By establishing subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based, the company can reduce its dependence on a single market or economy. This means that if one market experiences a downturn, the company can rely on the other markets to maintain its revenue and profits. Overall, diversifying across different markets with different business cycles is an effective way to mitigate risk and ensure long-term stability.

To Diversify Internationally for the Purpose of Reducing Risk, Which