Which of the following is NOT a common objective for establishing subsidiaries abroad?

Which of the following is NOT a common objective for establishing subsidiaries abroad?

• A. Natural resource-seeking
• B. Market-seeking
• C. Efficiency-enhancing
• D. Risk-averse

Answer: (D)

The establishment of subsidiaries abroad typically serves several strategic objectives aimed at enhancing a company's competitive position and operational effectiveness. Common objectives include natural resource-seeking, where companies expand to acquire raw materials that may not be available or economically viable in their home country. Market-seeking is another prominent objective; firms often establish subsidiaries to tap into new markets, reach local customers, and capitalize on regional demand. Efficiency-enhancing is also a critical goal, as companies may set up subsidiaries in locations that provide cost advantages, such as lower labor costs or favorable production facilities, thereby improving overall operational efficiency. On the other hand, being risk-averse does not align with the typical motivations behind establishing foreign subsidiaries. Setting up in new countries inherently introduces a variety of risks, including political, economic, and cultural uncertainties. Companies that choose to invest abroad are often willing to accept these risks in pursuit of growth, resource acquisition, or operational efficiency, making risk-averse an uncommon objective in this context.

The establishment of subsidiaries abroad typically serves several strategic objectives aimed at enhancing a company's competitive position and operational effectiveness. Common objectives include natural resource-seeking, where companies expand to acquire raw materials that may not be available or economically viable in their home country. Market-seeking is another prominent objective; firms often establish subsidiaries to tap into new markets, reach local customers, and capitalize on regional demand.

Efficiency-enhancing is also a critical goal, as companies may set up subsidiaries in locations that provide cost advantages, such as lower labor costs or favorable production facilities, thereby improving overall operational efficiency.

On the other hand, being risk-averse does not align with the typical motivations behind establishing foreign subsidiaries. Setting up in new countries inherently introduces a variety of risks, including political, economic, and cultural uncertainties. Companies that choose to invest abroad are often willing to accept these risks in pursuit of growth, resource acquisition, or operational efficiency, making risk-averse an uncommon objective in this context.