In a brief essay, discuss how both exporting and FDI enable ...

[ap345]

In a brief essay, discuss how both exporting and FDI enable international businesses to maintain control in a foreign environment.
 
  What will be an ideal response?

Question 2

Gains and losses do not directly affect cash flows in the case of translation exposure, but cash flows can be significantly affected by transaction exposure.
 
  Indicate whether the statement is true or false

[Perkypinki]

Answer to Question 1

With exporting, the firm can control its financial exposure to the host country market as it deems appropriate. Little or no capital investment may be needed. Second, exporting permits a firm to enter a foreign market gradually. A firm can then monitor its success prior to more extensive entry into that market. FDI affords the firm increased control over its international business operations, as well as increased profit potential. Control is particularly important to the firm if it needs to closely coordinate the activities of its foreign subsidiaries to achieve strategic synergies, as IBM has long done, or if it determines that the control is necessary in order to fully exploit the economic potential of proprietary technology, manufacturing expertise, or some other intellectual property right.

Answer to Question 2

TRUE