The form of international expansion which gives an organization high potential return because the organization does not have to share its profits with a foreign organization, and it reduces the level of risk because the organization's managers have full control over all aspects of their foreign company's operations is:

Question

Business

Rayne Galloway

30 November, 09:50

The form of international expansion which gives an organization high potential return because the organization does not have to share its profits with a foreign organization, and it reduces the level of risk because the organization's managers have full control over all aspects of their foreign company's operations is:

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Answers (1)

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Tabby · Answer 1

The correct answer is Wholly owned foreign subsidiary.

Explanation:

A wholly owned subsidiary is a company with common shares 100% owned by another company, i. e. the parent company. While a company may become a wholly owned subsidiary through an acquisition by the parent company or have been spun off from the parent company, a regular subsidiary is 51% to 99% owned by the parent company.

When lower costs and risks are desirable, or when complete or majority control is not possible, the parent company may introduce a subsidiary, associate or associate in which it would own a minority interest.