High transportation costs and/or tariffs imposed on imports help explain why many firms prefer _____________ over _____________.
A) foreign direct investment or licensing; exporting
B) foreign direct investment or licensing; joint ventures
C) exporting; foreign direct investment or licensing
D) strategic alliances; foreign direct investment or licensing
E) licensing; foreign direct investment

Question

Quizplus · Accepted Answer

High transportation costs and tariffs make exporting less attractive, so firms often prefer to invest directly in foreign markets through foreign direct investment or licensing agreements. Joint ventures may also be a viable option in some cases, but it is not mentioned as a preferred alternative in the question. Strategic alliances and licensing alone may not provide enough control over production, distribution, and marketing activities to justify the costs and risks associated with foreign expansion.

High Transportation Costs And/or Tariffs Imposed on Imports Help Explain