Some of the costs incurred by firms pursuing international diversification may derive from higher coordination expenses, trade barriers, and lack of familiarity with local cultures.

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Pursuing international diversification can lead to higher coordination expenses, as firms need to coordinate and manage their operations across various countries and cultures. Additionally, trade barriers such as tariffs and quotas can increase costs for firms operating in foreign markets. Finally, lack of familiarity with local cultures can lead to costly mistakes in marketing and product development.

Some of the Costs Incurred by Firms Pursuing International Diversification