One disadvantage of direct investment when entering a new global market is that
A)intermediaries have the potential to harm the brand.
B)the firm entering the foreign market must pay royalties to the government.
C)the company forgoes control over its product.
D)the financial commitments involved.
E)this method is likely to provide the fewest cost savings relative to the other global market-entry options.

Question

Quizplus · Accepted Answer

Direct investment involves significant financial commitments, including establishing a physical presence in the foreign market, investing in infrastructure and employees, and potentially acquiring local companies. These costs can be substantial and may leave the company vulnerable if the venture is not successful.

One Disadvantage of Direct Investment When Entering a New Global