In which one of the following modes of entry into foreign markets risk and profit potential are the highest?

Correct option is C

Direct investment involves establishing a physical presence in a foreign market through the ownership or significant control of facilities, production units, or subsidiaries. This mode of entry has the highest risk due to factors like political instability, regulatory challenges, and economic uncertainties. However, it also offers the highest profit potential as the firm retains full control over operations, enjoys economies of scale, and benefits directly from market demand.