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International Business - I

Question
CBSEENBS11004550
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Explain the advantages and disadvantages of wholly owned subsidiaries.

Solution
Advantages :

1. The parent firm is able to exercise full control over its operations in foreign countries.

2. Since the parent company on its own looks after the entire operations of foreign subsidiary, it is not required to disclose its technology or trade secrets to others.

Disadvantages :

1. The parent company has to make 100 percent investments in the foreign subsidiaries. This form of international business is, therefore, not suitable to small and medium size firms which do not have much funds with them to invest abroad.

2. Since the parent company owns 100 per cent equity in the foreign company, it alone has to bear the entire losses as resulting from failure of its foreign operations.

3. Some countries are adverse to setting up of 100 per cent wholly owned subsidiaries by the foreigners in their countries. Such form of international business operations, therefore, becomes subject to higher political risks.

Some More Questions From International Business - I Chapter

Below are given some activities relating to business. Some of them are correct and some are wrong. Which of them are wrong and which are right ?

_________ provides information to customer.

__________ activities are those activities under which goods and services are sold.

The activities which help in smooth flow of trade are know as __________.

__________ industry makes use of  products which are extracted and produced by primary sector as their raw material and produce finished products.

Define “global village”.

Give meaning of International Business.

Give the types of mode of entry into International Business.

Give meaning of merchandise export and import.

Give meaning of service exports and imports.

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