Question

Brooke Monroe, the Vice President of Manufacturing for Diacon Products has made a strong argument for the company to enter foreign markets via turnkey projects. However, the company's Chief Financial Officer, Nandu Kishore argues that turnkey projects being short-term propositions could be disadvantageous for the firm if a country subsequently proves to be a major market for the output of the process that has been exported. Brooke Monroe could counter this objection by arguing that Diacon Products can get around this problem by

Answer 1

The answer is: If the new market proves to be big enough for Diacon Products (DP) to enter, they can always build a new facility for themselves.

Step-by-step explanation:

Unless prohibited in the contract, DP will always be able to build new factories or facilities in the new markets they just entered. Their better know how on the production processes will always be an advantage for them.

For instance they might build a new cement factory in India. If India´s market for cement turns to be huge and DP decides to enter into it, of course they should be able to build a new cement plant for themselves. They will probably be able to set up the cement plant in a better way than before due to the experience they gained the first time.

Usually the worst thing to do is simply nothing. If they believe a market is so good for them to enter, then they should do it directly the first time. But if they are unsure, building a turnkey project for someone else is very good marketing research.