Question

1. The following are reasons "why" a company decides to expand globally, except:

A. Improved efficiency by obtaining lower cost resources

B. Increased growth opportunities

C. Reduction in local labor force

D. Just because a competitor starts in a foreign country

2. There are many risks associated with international expansion. What is one risk associated with a global strategy?

Answer 1

Answer 1:

As company is globally expanding lets evaluate and do reasoning for the same for each option.

Option A talks about improving efficiency by lower cost resources which might not be connected. Efficiency is by improving the output within stipulated timeframe hence this option is not correct.

Option B talks about the increased growth opportunities which is correct as each region, country has a saturation for business to expand and thus for the growth organization may venture out of that region which is called global expansion strategy.

Answer 2:

As you globally expand the business, there are several risks like subsidies, economic helpline, IP theft etc. One risk that is most crucial is IP Theft which is copying of the technology by local vendors. For e.g. whenever Rolls- Royce, BMW rolls out the any successful model, a copy of the same with economical prices is available in chinese market. So this is the biggest risk of globally expanding.