Why do companies decide to enter a foreign market?
A)to capture economies of scale in product development, manufacturing, or marketing
B)to raise input costs through greater pooled purchasing power
C)to decrease the rate at which they accumulate experience and move up the learning curve
D)to concentrate risk within a broader base of countries, especially when sales are down in one area and the company can undermine sales elsewhere
E)to exploit the natural resources found within its home market

Question

Quizplus · Accepted Answer

Companies often enter foreign markets to capture economies of scale in product development, manufacturing or marketing. This allows the companies to increase their efficiency and profitability by expanding their customer base and potentially lowering production costs.

Answer: D
 Companies may decide to enter foreign markets to concentrate risk within a broader base of countries. This allows them to diversify their revenue streams and mitigate the impact of negative market conditions in one area by increasing sales in other areas.

Why Do Companies Decide to Enter a Foreign Market