A.I. Explanation:

Correct answer: borders

Explanation: The word 'borders' refers to the geographical boundaries that separate different countries. In this context, it fits grammatically as a plural noun that aligns with the action of firms reaching out across different countries to establish operations. The use of 'borders' indicates the international aspect of business expansion.

Meaning: 'Borders' are the lines that define the limits of a country or region.

Wrong options:

• location: 'Location' is a noun that refers to a specific place, but it does not fit the context of crossing geographical boundaries as 'borders' does.
• limit: 'Limit' is a noun that refers to a point beyond which something does not extend, which does not convey the idea of crossing into other countries.
• arrangement: 'Arrangement' is a noun that refers to an agreement or plan, which does not relate to the physical act of crossing geographical boundaries.
• industry: 'Industry' is a noun that refers to a specific branch of economic activity, which does not fit the context of geographical movement.
• institution: 'Institution' is a noun that refers to an established organization, which does not relate to the concept of crossing borders.

Correct answer: location

Explanation: The term 'location' is a noun that refers to a specific place or position. In this context, it fits grammatically as it describes where the subsidiary is established, maintaining coherence with the overall theme of business expansion into different areas.

Meaning: 'Location' refers to a particular place or position where something is situated.

Wrong options:

• borders: 'Borders' refers to geographical boundaries, which does not fit here as it does not describe a place where a subsidiary can be established.
• limit: 'Limit' refers to a boundary or restriction, which does not convey the idea of a place where business operations occur.
• arrangement: 'Arrangement' refers to an agreement or plan, which does not describe a physical place.
• industry: 'Industry' refers to a specific sector of economic activity, which does not fit the context of a place for establishing a subsidiary.
• institution: 'Institution' refers to an established organization, which does not relate to the concept of a specific place.

Correct answer: arrangement

Explanation: The word 'arrangement' is a noun that refers to an agreement or plan made between parties. In this context, it fits grammatically as it describes the method by which Western firms conduct their business operations, indicating a structured approach to outsourcing.

Meaning: 'Arrangement' refers to an agreement or plan made for a specific purpose.

Wrong options:

• location: 'Location' refers to a specific place, which does not fit the context of describing a method or plan for conducting business.
• limit: 'Limit' refers to a boundary or restriction, which does not convey the idea of a structured method for business operations.
• borders: 'Borders' refers to geographical boundaries, which does not fit the context of business arrangements.
• industry: 'Industry' refers to a specific sector of economic activity, which does not describe a method of conducting business.
• institution: 'Institution' refers to an established organization, which does not relate to the concept of a business arrangement.