In what ways is exporting a better way of entering into international markets than setting up wholly owned subsidiaries abroad?



Q.4:- In what ways is exporting a better way of entering into international markets than setting up wholly owned subsidiaries abroad?

 

Answer:-

Exporting is a better way of entering into international markets than setting up wholly owned subsidiaries abroad in the following ways

(i) Exporting is the easiest way of gaining entry into international markets. It is less complex than setting up and managing joint ventures or wholly owned subsidiaries abroad.



(ii) Exporting involves lesser time and effort as business firms are not required to invest that much time and money as is needed when they set up manufacturing plants and facilities as wholly owned subsidiary in host countries.

(iii) Since exporting does not require much of investment in foreign countries, exposure to foreign investment risks is nil or much lower than that in establishing wholly owned subsidiary.