An MNC wants to invest in India. Of the following entry modes, select the right order in terms of…
Standard analysis establishes the order branch office, co-operative joint venture, equity joint venture, portfolio investment and wholly owned subsidiary. Risk rises with…
Choose your answer
An MNC wants to invest in India. Of the following entry modes, select the right order in terms of increasing risk.
(a) Co-operative joint venture
(b) Branch office
(c) Portfolio investment
(d) Wholly owned subsidiary
(e) Equity joint venture
Answer and explanation
Correct answer B
Standard analysis establishes the order branch office, co-operative joint venture, equity joint venture, portfolio investment and wholly owned subsidiary. Risk rises with the capital committed and the share of ownership borne by the MNC alone: a branch office needs little investment, joint ventures share risk with a local partner, and a wholly owned subsidiary places the entire investment risk on the parent company.
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