Question

Typically, the last step in the internationalization process is:

A. Licensing

B. The sales subsidiary

C. FDI

D. Portfolio investment

*Instructions: Choose just one correct answer and provide a clear detailed explanation why you chose it.

Answer 1

Question:- Typically, the last step in the internationalization process is

Correct option:- FDI

Reason:- The main motive of market-seeking FDI is the exploitation of new markets. These kinds of firms invest in a host country so that they can serve different types of goods and services to the local customers. In this case, the one production activity is replicated in different locations to fulfill the local demand and it will be termed as horizontal FDI. Market size and market growth of the host country; the access to regional and global markets, the market structure are the main factors to contribute these types of FDI.

This is called as the last step of internationalization process as the company is ready to take the risk of long-term investment and this was taken trusting the environmental and economic aspect of that country.