Questions: The possibility of having all foreign assets expropriated is the major shortcoming of what strategy? Foreign direct investment Exporting International joint ventures Strategic alliances

The answer is: Foreign direct investment.

Explanation for each option:

1. Foreign direct investment (FDI): This strategy involves a company investing directly in facilities to produce or market a product in a foreign country. The major shortcoming of FDI is the risk of expropriation, where a host government may seize foreign-owned assets. This risk is particularly significant in countries with unstable political environments or where there is a history of nationalizing foreign assets.

2. Exporting: This strategy involves producing goods in one country and selling them in another. The risk of expropriation is minimal with exporting because the company’s assets remain in the home country. The primary risks associated with exporting include trade barriers, tariffs, and exchange rate fluctuations.

3. International joint ventures: This strategy involves partnering with a foreign company to share ownership and control of a business. While there is some risk of expropriation, it is generally lower than with FDI because the local partner may help mitigate political risks. However, joint ventures can face challenges such as cultural differences and conflicts of interest.

4. Strategic alliances: These are agreements between companies to cooperate in certain areas while remaining independent. Strategic alliances typically involve less investment in foreign assets, reducing the risk of expropriation. The main challenges include managing the partnership and ensuring mutual benefits.

In summary, foreign direct investment carries the highest risk of expropriation compared to the other strategies listed.