ASSIGNMENT

Submitted to Ma’am Sana

Submitted by Muqaddas Zubair

Roll no 32

Topic Direct foreign investment

DPT Business administration

Semester 8th
 CRITICAL THINKING AND DISCUSSION QUESTION
Q# 4 You are the international manager..................................................
............................................................................................... to your CEO.
ANS# There are multiple options to enter a new market and develop a new market, such as
Direct export, franchising the trade opportunity, licensing to a manufacturer for production
and marketing, and set up of a subsidiary entity.

Advantages Nd disadvantages
 Exporting from the U.S.
Advantage Avoids the cost of establishing manufacturing operations in Europe which may
lead to economy of scale

Disadvantage. include reduction of profit margin due to transportation cost, cost of trade
barriers, Possible loss of control over marketing of product.

 Licensing a European firm to manufacture and market computer

Advantages: Reduces development costs and the risks of establishing foreign enterprise,

Overcomes restrictive investment barriers

Disadvantage. they can copy your secret formulas.
 To set up a wholly owned subsidiary in Europe
Advantage: access to a new market
Establishing a foreign subsidiary also enables a parent company to expand its target
consumer and to introduce its products and services to a new group of prospects
Disadvantage: Cultural and Political Challenges in Host Country.