Question

An international firm considering foreign expansion should take into account that: a) the timing and scale of entry of foreign expansion are minor details in comparison with the choice of foreign market. b) the long-run economic benefits of doing business in a country are solely a function of the country's population size. c) if the firm's core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology. d) the costs and risks associated with foreign expansion are higher in economically advanced nations. e) politically unstable and less developed nations offer favorable benefit-cost-risk trade-off conditions.

Answer 1

Answer: c) if the firm's core competence is based on proprietary technology, entering a joint venture might risk losing control of that technology.

Explanation:

When firms expand into international markets, it is a standard practice to partner with a local company that already has expertise in the market to enable an easier transition.

This creates a problem however because in partnering with the company, the competitive advantage that the company holds could be at risk. This is even more so if the competitive advantage is based on proprietary technology and by entering into a partnership and giving another company access to that technology, there is a risk that control could be lost.