Athletic Apparel Inc. Strategy: Direct Investment in China

What strategy would be the best for Athletic Apparel Inc. to use in establishing production in China?

Understanding Direct Investment

Direct investment is the act of investing in a business with complete autonomy. In this case, it refers to establishing a production unit in China for Athletic Apparel Inc. This strategic move will enable the company to reduce transportation and storage costs, as well as provide better market intelligence.

Benefits of Direct Investment

By opting for direct investment, Athletic Apparel Inc. will have full control over the production process in China. The company will incur capital costs, influence the returns, and be exposed to risks associated with the investment. This approach allows the company to have a direct impact on the operations and outcomes of its production unit in China.

Direct Investment in China

Establishing a production unit in China through direct investment means that Athletic Apparel Inc. will own and operate the facility as a subsidiary of its business. This gives the company a significant stake in the operations and performance of the unit, which can lead to better control over quality, costs, and overall efficiency.