Question

The method of international expansion which presents managers with many threats and is the most expensive due to the high level of foreign investment is the method of international expansion through:

Answer 1

The correct answer is letter "E": wholly-owned subsidiaries.

Step-by-step explanation:

A wholly-owned subsidiary is a corporation with a common stock owned by another company at 100%. The parent company manages all manufacturing, operations, and revenues but also shares risks and obligations. Larger investments are necessary to own a subsidiary since in many cases they are in different countries from the parent company headquarters which implies hiring professionals in every county where subsidiaries are to be assessed in legal regulations.

Answer 2

Wholly owned subsidiary.

Step-by-step explanation:

A wholly owned subsidiary is one that is funded wholly by its owners and does not have external sources to fund their operations. When a wholly owned subsidiary is setting up business overseas it is more expensive because there is no external funds to ease the financial burden of setting up operations abroad.

Since it is wholly owned the owners will also bear more risk in case a failure of the venture occurs. They also bear all the gains earned when operating abroad.

So wholly owned business presents more risk and there is more cost burden involved in setting up services abroad.