Statement I: Companies with low cash reserves normally prefer licensing mode rather than foreign direct investment. Statement II: Cash rich firms normally prefer foreign, direct investment.

The correct answer is: Statement I is true, but Statement II is false.

Statement I is true because licensing mode is a relatively low-risk and low-cost entry mode for companies with low cash reserves. By licensing their technology or trademarks to a foreign company, they can generate revenue without having to make a large initial investment.

Statement II is false because cash-rich firms may prefer other entry modes, such as wholly owned subsidiaries, which give them more control over their operations in foreign markets.

Here is a brief explanation of each option:

• Both statements are true. This is not the case, as Statement II is false.
• Both statements are false. This is not the case, as Statement I is true.
• Statement I is true, but Statement II is false. This is the correct answer.
• Statement I is not true, but Statement II is true. This is not the case, as Statement II is false.