Question

The benefits of expanding into international markets include each of the following opportunities EXCEPT:______ a. increasing the size of the firm's potential markets. b. favorable tax concessions and economic incentives by home-country governments. c. economies of scale and learning. d. location advantages.

Answer 1

Answer:

b. favorable tax concessions and economic incentives by home-country governments.

Explanation:

Venturing in international trade offers a business the opportunity to expand its market. The company will be able to distribute and sell its products to new regions and territories.  A company will be able to grow its output, which results in economies of scale.  

Growth in output requires the company to do large scale production. Production cost unit per unit decreases as a business output increases. After breakeven, every other unit produced contributes to an organization's profitability. International markets create chances of getting better locations for setting up new branches or finding cheap materials.

A Tax incentive is not a reason for engaging in foreign markets. Even if incentives are there, they last for a few years. Home countries will hardly give concessions to businesses engaging in international trade.