Firms pursuing global standardization or transnational strategies tend

QUESTION

Firms pursuing global standardization or transnational strategies tend to prefer setting up wholly owned marketing subsidiaries.

Indicate whether the statement is true or false.

ANSWER

TRUE
Setting up wholly owned marketing subsidiaries is preferable to joint-venture arrangements and to using foreign marketing agents because it gives the firm tight control that might be required for coordinating a globally dispersed value chain. It also gives the firm the ability to use the profits generated in one market to improve its competitive position in another market. In other words, firms pursuing global standardization or transnational strategies tend to prefer establishing wholly owned subsidiaries.