Derrido's chief financial officer thinks that the company should enter into a contractual agreement because it will give Derrido an immediate and steady stream of revenue.Which of the following,if true,would strengthen this argument?
A) Contractual relationships with foreign companies usually involve many rounds of negotiations.
B) Contractual relationships are less expensive to enter into than direct investment.
C) Compared to direct investment, contractual relationships make business less subject to unpredictable changes.
D) Compared to other forms of entry into international markets, contractual relationships tend to be risky.
E) Foreign companies in contractual relationships may behave unpredictably at future points in time.

Question

Quizplus · Accepted Answer

C)If business is less subject to unpredictable changes, this makes it more likely to be a source of a predictable stream of revenue over a long period. Choice A:If negotiations are typically lengthy, the revenue may be steady, but won't be immediate. Choice B strengthens the case that contractual relationships involve less expense in the short term, but not that they give a company a steady stream of revenue for the long term. Choices D and E weaken the case that a contractual relationship would give Derrido a predictable source of revenue over time.

Derrido's Chief Financial Officer Thinks That the Company Should Enter