Question

Vactin Motors, an automobile company, is a well-recognized brand. It does not have the capital and capabilities to set up manufacturing units abroad, although it is keen to have its products made in the foreign market. It decides to have the products produced and sold under its brand name.

1. In this case, which of the following modes of international market entry should be adopted by Vactin?Options:1) Joint venture2) Franchising3) Exporting4) Wholly owned subsidiaries

Answer 1

3. Exporting

Step-by-step explanation:

For a well-recognized brand like Vactin Motors who does not have enough capital to set up manufacturing units abroad, exporting would be the best mode of international market entry. One main reason for this is that the automobile company is a well-recognized brand. They also want to consider the risks associated before expanding.

Exporting is the process of selling locally made products to foreign countries. With this method, Vactin Motors can manage the resources it has in its home country in production of automobiles. Since there are no middle men, the cost of exportation is lower. This mode would also afford them the ability to protect their brand name. They would also make considerable profit.