Which of the following is an advantage of using an export strategy to build a business in international markets?

• A. It requires establishing manufacturing facilities in each target country.
• B. It guarantees complete control over foreign distribution channels.
• C. It allows firms to enter foreign markets with lower initial investment costs.
• D. It eliminates all risks associated with currency fluctuations.

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the concept of an export strategy. An export strategy involves selling domestically produced goods to foreign markets without establishing physical operations like manufacturing plants abroad.
2. Step 2: Identify the typical characteristics of export strategies, such as lower initial investment costs because firms do not need to build facilities or infrastructure in the target country.
3. Step 3: Compare export strategies with other international market entry methods, like foreign direct investment, which require higher capital and operational commitments.
4. Step 4: Recognize that export strategies do not guarantee complete control over foreign distribution channels, as firms often rely on intermediaries or partners in the target market.
5. Step 5: Note that export strategies do not eliminate risks such as currency fluctuations; these financial risks still exist and must be managed separately.