Question

Raymond Vernon states that the classic rationale for international diversification is to: Group of answer choices preemptively dominate world markets before foreign companies can establish dominance. avoid domestic governmental regulation. extend the product's life cycle. discover product innovations.

Answer 1

Answer:

extend the product's life cycle

Explanation:

International diversification refers to a situation wherein a company extends the sale of it's products or services beyond the domestic national boundaries, dealing in different i.e diverse goods and services which are somewhat unrelated to one another.

It refers to investing in more than one nation so as to spread and reduce the risk with respect to variability and fluctuation in return.

The higher the fluctuation in return, the higher is the risk, the more stable the return, lower the risk.

Diversification refers to investing in different assets and securities or nations, whose performance is least correlated to one another so that if one economy yields losses, profits and gains from another nation or economy would offset such losses and thus reduce the risks to which the total investment is subject to.

As per Raymond Vernon, the rationale behind international diversification is to extend the product's life cycle as international diversification increases the product's life cycle and i.e the period between a product's development and it's decline and withdrawal from a market.