What are the disadvantages of a wholly owned subsidiary as an entry mode to foreign markets?
What will be an ideal response?
A wholly owned subsidiary offers a firm maximum control over proprietary knowledge and technology, so that competitors cannot gain access. The foreign company retains full discretion to move resources to other countries and thereby enjoys greater strategic flexibility. A disadvantage is that wholly owned subsidiaries require large capital outlays and ownership is thus the most expensive method of operating in foreign markets. The firm bears the full brunt of business risks. Corporate managers may not sufficiently understand local conditions. If the firm exclusively uses wholly owned subsidiaries, the firm may not be able to operate in markets where legal or political imperatives require foreign firms to establish joint ventures with local partners.
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Indicate whether the statement is true or false
Under ________ liability theory, the defendant is engaged in an activity that is so inherently dangerous under the circumstances of its performance that no amount of due care can make it safe
A) negligence B) contributory C) strict D) comparative