Question

According to your text, the best means of using direct foreign investment to attract new sources of demand is probably to

a. establish a subsidiary in a market in which tougher trade restrictions will adversely affect the firm's export volume.


b. establish subsidiaries in markets whose business cycles differ from those where existing subsidiaries are based.


c. establish a subsidiary or acquire a competitor in a new market.


d. establish an additional subsidiary in an existing market than can sell products produced elsewhere.

Answer 1

c. establish a subsidiary or acquire a competitor in a new market.

Step-by-step explanation:

A foreign direct investment can be referred to as investment made by a firm in one country into business interests located in another country. Foreign direct investments can be made through the establishing a subsidiary or associate company in a foreign country, acquiring a controlling interest in an existing foreign company, or a merger or joint venture with a foreign company.

Option C is therefore correct as establishing a subsidiary or acquire a competitor in a new market to attract new sources of demand is a means of foreign direct investment.