Which form of entry into a foreign market causes the most risk?

Which form of entry into a foreign market causes the most risk?


A. Exporting

B. Joint venturing

C. Joint ownership

D. Licensing

E. Direct investment


Answer: (E) Direct investment involves the highest risk (E). Direct investment risks include devalued currencies, falling markets, and government takeover (nationalization). Exporting (A) involves very little risk because the company can passively export surpluses from time to time, or it can actively commit to the country. While joint venturing (B) often gives a company less control, it doesn't involve as much risk as direct investment. Joint ownership (C) is a type of joint venturing, and is incorrect. Licensing (D) is also a type of joint venturing, so it is incorrect.


Learn More :

Principles of Marketing

Learn More Multiple Choice Question :