The correct answer is: C. Direct investment
Direct investment is the highest risk and highest profit potential mode of entry into a foreign market. This is because it involves the establishment of a new business entity in the foreign market, which requires a significant investment of time, money, and resources. However, it also offers the potential for the highest returns, as the company will be able to capture a larger share of the market and benefit from economies of scale.
Indirect exporting is the lowest risk and lowest profit potential mode of entry into a foreign market. This is because it involves selling products through intermediaries, such as distributors or agents. The company does not have to establish a presence in the foreign market, which reduces the risk and investment required. However, it also means that the company will have less control over the marketing and distribution of its products, and will likely earn a lower profit margin.
Direct exporting is a higher risk and higher profit potential mode of entry than indirect exporting. This is because the company sells its products directly to customers in the foreign market, which gives it more control over the marketing and distribution of its products. However, it also requires a greater investment of time, money, and resources.
A joint venture is a partnership between two or more companies to establish a new business entity in a foreign market. This mode of entry offers a lower risk and lower profit potential than direct investment, as the company does not have to bear all of the costs and risks associated with establishing a new business entity. However, it also means that the company will have less control over the new business entity.
In conclusion, direct investment is the highest risk and highest profit potential mode of entry into a foreign market. Indirect exporting is the lowest risk and lowest profit potential mode of entry. Direct exporting is a higher risk and higher profit potential mode of entry than indirect exporting. A joint venture is a lower risk and lower profit potential mode of entry than direct investment.