New Frontier wants to use ________ to participate in the global marketplace.

Question

Scenario: Henry was having a few friends over for dinner, many of whom Henry knew from an international management association. Henry's company provides services to create detailed maps of world areas from satellites, which the firm then sells via the Internet to firms, countries, and others around the world. One of his guests, Tamia, bakes cakes for a living. Her recipes are so well liked that her company has grown dramatically. She has just sold the right to manufacture her cakes to a firm in eastern Alpland. Another friend, Chang, is a director at InSpiral, and his wife, Chloe, has contracted with the breakfast chain Flapjack Frank's to open a branch in their state, bearing all the preliminary expenses and development costs. Chang also announced that InSpiral and another company, McElwee's, are starting a new venture. Finally, Kamala works for New Frontier technologies, which is headquartered in her home country, and is soon to go abroad to work in New Frontier's new facility, which is an independent company that New Frontier owns and controls in another country. The guests were discussing how their companies decided to "go global."

A) licensing
B) franchising
C) exporting
D) joint ventures
E) wholly owned subsidiaries

Answer 1

E) wholly owned subsidiaries

Explanation: When a company's competitive advantage is based on technology, a wholly owned subsidiary normally is the preferred entry mode because it reduces the risk of losing control over the technology.