Question

Which one of the following modes of entry permits greatest degree of control over overseas operations?

• A. Licensing/franchising
• B. Wholly owned subsidiary
• C. Contract manufacturing
• D. Joint venture

Answer 1

The correct option is B Wholly owned subsidiary

A wholly owned subsidiary is a company where 100% of the share capital is invested by the parent company or the holding company. In case of foreign or overseas operations, this kind of mode is preferred as this gives the total control in the hands of the holding company. The holding company gets full authority to decide whether to start new operations or to procure an existing company doing business overseas in order to establish the subsidiary company.