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Which of the following modes of foreign market entry offers the most control and the highest potential return for a company?

1) Exporting
2) Joint venture
3) Contractual agreement
4) Strategic alliance
5) Direct foreign investment

1 Answer

5 votes

Final answer:

Direct foreign investment gives a company the most control and potential for high returns through a long-term and managerial involvement in the foreign entity.

Step-by-step explanation:

The mode of foreign market entry that offers the most control and the highest potential return for a company is direct foreign investment. This approach involves purchasing more than ten percent of a company and typically includes assuming some managerial responsibility. As compared to other forms such as exporting, joint ventures, contractual agreements, and strategic alliances, direct foreign investment allows for a more long-term focus, significant control over operations, and potential for higher returns, albeit with a greater investment of time and resources. Planning and carrying out a transaction for direct foreign investment can take a considerable amount of time but offers substantial rewards for those willing to make the commitment.

User Wolfgang Grinfeld
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