Question

The CEO of Jamil Circuits is unhappy with the firm's choice of wholly owned subsidiaries as the mode of foreign entry.He has pointed out a number of disadvantages to this mode.However,the CFO of the company is not sure if all of the disadvantages that the CEO is noting are correct.Which of the following is a disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets?
A) lack of control over quality
B) high costs and risks
C) problems with local marketing agents
D) inability to engage in global strategic coordination
E) lack of control over technology

Answer 1

Answer: high cost and risk

Explanation:

From the question, we are informed that the CEO of Jamil Circuits is unhappy with the firm's choice of wholly owned subsidiaries as the mode of foreign entry and that hee has pointed out a number of disadvantages to this mode.

A disadvantage of wholly owned subsidiaries as a mode of entry into foreign markets is high costs and risks. A lot of risk is involved which may hinder the success of the business.