Question

Executives at Energex Enterprises are trying to determine whether it would be better to own and operate a factory overseas or to contract with a foreign firm to do this through a licensing agreement. Which theory would most likely help the Energex executives make this decision?

Answer 1

Answer:

Internalisation theory

Explanation: Internalisation theory is a theory that tries to explain or study the factors and conditions which affects Organisations in their push to enter a foreign market.

Through an understanding of internalization theory a firm wishing to invest in a foreign country will be able to understand the possible threats in order to put strategies in place to overcome such threats and be profitable.