Neon Inc. considers two foreign markets for expansion. The first market has lesser taxes compared to the second along with more lenient trade regulations. Thus, Neon chooses the first market despite it being more distinct in terms of language and tradition. By choosing the first market, Neon exhibits a(n)__________.

Question

Quizplus · Accepted Answer

Neon Inc. is leveraging differences in administrative and regulatory environments between two countries, which is referred to as administrative arbitrage. They choose a market with lesser taxes and more lenient trade regulations, indicating a decision based on administrative factors rather than cultural or economic ones.

Neon Inc Considers Two Foreign Markets for Expansion