Question

Suppose that there are significant costs associated with coordinating a subsidiary with the parent organization and assessing the market potential of a foreign country. If there are also significant tariffs, in this case ________________is likely to be the lowest-cost method of supplying goods abroad. a. subsidiary production b. direct exporting c. conglomerate integration d. licensing

Answer 1

Answer:

a. subsidiary production

Explanation:

Subsidiary production occurs when a company that produces a particular product is an affiliation of another.

A subsidiary is referred to as a company owned by another. The owning company is normally called the holding company. The subsidiary operates just as the way it should, the holding company just perform oversight function.

Answer 2

Answer:

A) subsidiary production

Explanation:

We are told that it is very expensive for the subsidiary to import goods because:

1. high coordination costs between the subsidiary and corporate headquarters
2. high import tariffs (taxes) that increase the costs of imported goods

If the corporation wants to enter that foreign market it will probably be better to start producing their products domestically. This way they can reduce coordination costs and avoid import tariffs.