Question

The most common way of investment for multinational companies of the countries of the world is -

• A. To establish new companies
• B. Buy the local companies
• C. Partnership with local companies
• D. Capturing the developing countries

Hint:

The most common strategy for multinational companies is acquiring local companies in foreign markets to expand their reach and operations.

Answer 1

The Correct Option is B

Step 1: Investment Strategies of Multinational Companies
Multinational companies (MNCs) usually prefer to invest in foreign markets by acquiring local companies in the target countries. This strategy allows them to quickly establish a presence in the market, access existing customer bases, and benefit from local market knowledge.

Step 2: Why the other options are incorrect
- (A) To establish new companies: While MNCs may sometimes establish new companies, this is not as common as acquiring existing local companies.
- (C) Partnership with local companies: Partnerships do occur, but acquiring local companies is a more direct way of investing.
- (D) Capturing the developing countries: MNCs do not "capture" countries but rather invest in business ventures to expand their operations.
Thus, the correct answer is option (B) Buy the local companies.