Final answer:
Earth Movers Inc. is using a wholly owned subsidiary as their entry mode for building a plant in Spain. This ensures they have full control over their operations, while maintaining consistent quality and environmental standards across their global facilities.
Step-by-step explanation:
Earth Movers Inc. is planning to build a plant in Spain for manufacturing products to be sold in Europe. Considering their need for large-scale equipment to produce their products, the type of entry mode that Earth Movers Inc. is using is best described as a wholly owned subsidiary. This approach involves the company owning 100% of the subsidiary abroad and fully controlling the operations and decision-making of the new plant. This entry mode differs from others like licensing, franchising, or turnkey projects, in that it allows Earth Movers Inc. to have complete ownership and operational control, which is important when specialized equipment and manufacturing processes are involved.
Moreover, when companies establish operations in foreign countries, they often prefer to build plants similar to those in their home countries, even if local environmental regulations are less strict. By doing so, they avoid the complex and costly task of redesigning plants, minimize the risks associated with environmental disasters, and maintain a consistent standard of quality and compliance. This strategic choice can lead to better compliance records in foreign locations and help to maintain the brand's reputation globally.