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Which of the following is NOT a reason why a company might

undertake foreign direct investment?
a. To more easily sell a product or service
b. To pay lower corporate taxes
c. To comply with strict WTO

User Jannine
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1 Answer

7 votes

Final answer:

A company might not undertake foreign direct investment to comply with strict World Trade Organization regulations since these do not directly influence investment decisions. Companies engage in FDI for various reasons, including market penetration, tax benefits, and strategic business advantages, but not due to WTO compliances.

Step-by-step explanation:

The main answer to why a company might not undertake foreign direct investment (FDI) is c. To comply with strict WTO regulations. FDI is primarily pursued for strategic business reasons, including to easily sell a product or service (a) or to benefit from lower corporate taxes (b). Companies may use FDI to gain a foothold in a foreign market, obtain access to resources, or reduce production and logistical costs. However, complying with strict WTO (World Trade Organization) rules is not a reason for FDI. Instead, companies might undertake FDI despite such regulations, which are geared towards promoting fair trade practices and reducing trade barriers, not directly influencing investment decisions.It's crucial to note that there are various reasons why companies engage in international strategies like FDI beyond the few mentioned in the question. For example, some firms may seek to bypass trade barriers, access new technologies, or manage supply chains more effectively. Meanwhile, issues like environmental standards and concerns about national security due to over-reliance on imported goods do factor into governmental policies regarding trade and investment, but they are more related to the broader implications of FDI rather than direct reasons why a company would invest abroad.

User Danbal
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