International product cycle theory explains that companies do not invest abroad reactively once their foreign market position are threatened by local competitors.

Question

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International product cycle theory suggests that companies initially develop and produce new products in their home country. As the product matures and foreign demand increases, they start exporting. Eventually, to maintain competitive advantage and respond to local market needs, they may invest in production facilities abroad, often as a reaction to emerging local competitors threatening their market position.

International Product Cycle Theory Explains That Companies Do Not Invest