What does direct investment allow a firm to maintain in a foreign country?

Direct investment allows a firm to maintain complete ownership of its operations in a foreign country. This approach involves a company investing directly in facilities, resources, and other assets in the foreign market, which enables it to have full control over its operations, strategies, and profit margins. By establishing wholly owned subsidiaries or branches, the firm can implement its business practices and policies without interference from local partners or the complications that may arise from shared ownership structures.

This level of control is particularly advantageous when a company wants to ensure the consistency of its brand image, quality, and operational standards while adapting to the unique preferences and regulations of the foreign market. Unlike other options such as franchising, which limits ownership and control, direct investment secures the firm's position and decision-making capabilities in that market.

Additionally, complete ownership allows for more straightforward repatriation of profits and potentially greater returns on investment. The focus in this scenario is on the strategic benefits and autonomy provided to the firm, making it a preferred strategy for companies looking for a strong presence in international markets.