Which of the following best describes a common practice in direct investment?

The correct answer is the ownership and operation of production facilities in another country, which is a hallmark of direct investment. This approach involves a company establishing a physical presence overseas by either building new facilities or acquiring existing ones. It allows for a greater level of control over operations, production processes, and market entry strategies compared to other forms of international business activities.

Direct investment is characterized by significant financial commitment and long-term involvement in the foreign market, which can lead to increased market share and potentially lower production costs due to local resources and labor. This strategy is particularly beneficial for companies looking to deeply penetrate a market, create jobs, and build stronger relationships with local stakeholders.

Other options like forming joint ventures, exporting, or licensing, involve varying degrees of cooperation or less commitment compared to direct ownership. Joint ventures still require collaboration with local partners and do not denote the same level of autonomy. Exporting focuses on sending products rather than establishing a production presence. Lastly, licensing involves granting rights to foreign entities, which limits control over how the product or technology is used. Thus, owning and operating production facilities distinctly aligns with the principles of direct investment.