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Which one of the following modes of entry permits greatest degree of control over overseas operations?
- a)Contract manufacturing
- b)Licensing/franching
- c)Wholly owned subsidiary
- d)Joint venture
Correct answer is option 'C'. Can you explain this answer?
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Which one of the following modes of entry permits greatest degree of c...
Answer (C) The parent company acquires full control over the foreign company by making 100% investment in its equity capital in a wholly owned subsidiary.
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Which one of the following modes of entry permits greatest degree of c...
To determine which mode of entry permits the greatest degree of control over overseas operations, we need to compare the options provided.
A: Contract manufacturing
- Involves outsourcing the manufacturing process to a third party.
- The company retains control over product design and specifications but has limited control over production and operations.
B: Licensing/franchising
- Involves granting the rights to use intellectual property, brand, or business model to another party.
- The company has limited control over the operations and activities of the licensee or franchisee.
C: Wholly owned subsidiary
- Involves establishing a new subsidiary in the foreign market, where the company has full ownership and control.
- Provides the highest degree of control as the company can make all strategic and operational decisions.
D: Joint venture
- Involves partnering with a local company to establish a new entity.
- The degree of control varies depending on the terms of the joint venture agreement, with shared decision-making and control.
Therefore, the mode of entry that permits the greatest degree of control over overseas operations is wholly owned subsidiary (option C).
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Which one of the following modes of entry permits greatest degree of c...
Option c
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Which one of the following modes of entry permits greatest degree of control over overseas operations?a)Contract manufacturingb)Licensing/franchingc)Wholly owned subsidiaryd)Joint ventureCorrect answer is option 'C'. Can you explain this answer?
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