Question

Why are wholly owned subsidiaries preferred by firms pursuing global or transnational strategies? A. They are more challenging B. They are less costly than other modes C. They allow the use of profits generated in one market and improve the competitive position in another D. They allow for easier management and transitions

Answer 1

Answer:

C. They allow the use of profits generated in one market and improve the competitive position in another.

Explanation:

• A wholly owned subsidy is a company whose stocks are completely owned by the parent company which allows the spent company to diversify, manage and reduce or distribute the risk having a legal control over the operations and the processes.

• The transnational strategy is more of a personal approach towards the sales and marketing of the goods and the services. The Mcdonald's uses transnational strategy in fast-food chain as they rely on the brand name.

• Other large MNC also uses the global or the transnational strategies like the IBM, Citigroup having multiple levels of subsidies. It helps them to be more competitive and improve their position in another market.