Cost of Doing Business Abroad vs. Liability of Foreignness


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What costs should a business consider when thinking of expanding beyond its borders?

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1. Thomson Incorporated has a cost of operating a homegrown business of $10,000,000. The cost of operating a foreign one is $13,000,000. What is the Liability of Foreignness?

2. The costs of doing business abroad includes all of the following except

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About This Quiz & Worksheet

Businesses have to evaluate a multitude of factors and costs, and this quiz will verify what you know about CDBA and LOF considerations. For the most part, the questions ask about terms by providing definitions or fill-in-the-blank style questions.

Quiz & Worksheet Goals

These assessment tools will give you a better idea of what you understand concerning:

  • Business expansion costs
  • Foreign vs. homegrown business costs
  • Included expenses in the cost of doing business abroad
  • Native business competition costs
  • Additional expenses for operating internationally

Skills Practiced

Use of this quiz and worksheet will allow you to refine the following skills:

  • Critical thinking - apply relevant concepts to examine information about expenses for competing against native businesses in a different light
  • Interpreting information - verify that you can read information regarding business expansion costs and interpret it correctly
  • Knowledge application - use your knowledge to answer questions about additional expenses for moving into international markets

Additional Learning

Go past the base knowledge of the quiz questions by examining the attached Cost of Doing Business Abroad vs. Liability of Foreignness lesson. Additional information covered in this lesson includes:

  • Overview of international expansion
  • Risk and integration
  • Practical example of CDBA and LOF considerations