Final answer:
When entering foreign markets, businesses often use foreign direct investment with a long-term focus, while in domestic markets, portfolio investment with a short-term focus may be preferred.
Step-by-step explanation:
When entering foreign markets, businesses often employ different strategies compared to their strategies for entering domestic markets. One major contrast is the level of investment and involvement. In domestic markets, businesses may use portfolio investment, where they purchase less than ten percent of a company and have a short-term focus. However, in foreign markets, businesses may opt for foreign direct investment, purchasing more than ten percent of a company and assuming some managerial responsibility, with a long-term focus.
For example, a U.S. firm that wants to buy a company in the United Kingdom may need to spend several weeks or months planning and carrying out the transaction. On the other hand, a U.S. portfolio investor who wants to buy or sell U.K. government bonds can do so quickly with a phone call or a few keyboard clicks.
So, the contrast between international and domestic strategies lies in the level of investment, time frame, and degree of involvement in the market.