Question

Culinary Solutions Inc. manufactures cooking and baking equipment and has its base in the country of Vandevar. It has approximately 300 stores across the country and is already active in three foreign countries. It attempts to establish itself in the country of Balalaika, and uses its low-cost strategy to do so. However, due to the additional costs associated with training, coordinating across geographic distances, and other costs associated with doing business in an unfamiliar cultural and economic environment, Culinary Solutions Inc. incurs huge financial losses in Balalaika. In this scenario, Culinary Solutions Inc.'s failure to establish itself successfully in Balalaika occurs most likely because:
a. it overestimates the geographic and cultural distance between vandevar and balalaika.b. it underestimated its dwindling reputation before it enters the balalaika market.c. it underestimated its liability of foreignness when entering the balalaika market.d. it overestimated its need to protect its intellectual property.

Answer 1

Answer: it underestimated its liability of foreignness when entering the Balalaika market

Explanation:

Culinary Solutions Inc.'s failure to be established successfully in Balalaika is most likely to be because of Culinary Solution Inc. underestimatstion of its foreigners liability when entering the Balalaika market.

Despite the low-cost strategy method used, the company can still incur additional costs which are associated with training, coordinating across geographic areas, and costs associated with doing business in unfamiliar cultural and economic environment.