To fully benefit from economies of scale, an MNC should:
A) establish a subsidiary in a new market that can sell products produced elsewhere, which allows for increased production and thus possibly greater efficiency.
B) establish a subsidiary in a market that has relatively low costs of labor or land.
C) establish a subsidiary in a market where raw materials are cheap and accessible.
D) participate in a joint venture in order to learn about a production process or other operations.

Question

Quizplus · Accepted Answer

Establishing a subsidiary in a new market that can sell products produced elsewhere can result in increased production and greater efficiency, which leads to economies of scale. This allows the MNC to take advantage of its existing production capabilities while distributing products in a new market, ultimately resulting in higher profits. The other options may also contribute to cost savings or learning opportunities, but they do not fully address the benefits of economies of scale.

To Fully Benefit from Economies of Scale, an MNC Should