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In which of the following modes of distribution in the foreign market will a company have to make maximum financial investment?

1) Export management companies
2) Trading companies
3) Export associations
4) Direct sales force
5) Complementary marketers

User Amitav Roy
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1 Answer

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Final answer:

A direct sales force generally requires the highest level of financial investment for companies exploring foreign market distribution modes due to the associated costs of personnel, physical presence, and regulatory compliance.

Step-by-step explanation:

The mode of distribution in the foreign market that generally requires the maximum financial investment is through a direct sales force. Establishing a direct sales presence involves significant costs, including hiring and training staff, setting up offices, and complying with local business regulations.

In contrast, other methods such as using export management companies, trading companies, export associations, or complementary marketers typically involve less investment. They often work on a commission or fee basis, reducing the need for a major upfront investment.

When it comes to foreign direct investment, more than ten percent of a company is purchased, and the investor assumes some managerial responsibility, implying a long-term commitment and significant financial resources.

It contrasts with portfolio investment, which involves purchasing less than ten percent of a company, often with a short-term focus and quicker liquidity.

Therefore. the correct answer is 4) Direct sales force.

User Alejandro Babio
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