To fully benefit from economies of scale, an MNC should:
A) establish a subsidiary in a new market that can sell products produced elsewhere.
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

By establishing a subsidiary in a new market that can sell products produced elsewhere, the MNC can fully utilize economies of scale by producing goods in one location and selling them in multiple markets. This reduces production costs and allows the MNC to take advantage of the efficiencies it has developed. However, establishing a subsidiary in a market with low labor or land costs or in a market where raw materials are cheap and accessible can also contribute to economies of scale to some extent. A joint venture, on the other hand, may not be the most effective way to fully benefit from economies of scale as it involves sharing ownership and control with another company, which may not align with the MNC's goals.

To Fully Benefit from Economies of Scale, an MNC Should