Final answer:
Expanding sales globally is supported by the ability to exploit economies of scale, the dynamic of international trade offering both competition and variety, and the fact that international agreements can counteract domestic protectionism. Further benefits include increased consumer awareness and the overall gains from improved efficiency surpassing the negatives of competition.
Step-by-step explanation:
The decision to expand sales globally is supported by several factors that indicate a favorable outcome for the firm. One significant factor is the ability to take advantage of economies of scale. This can be achieved when a company becomes large enough to supply an entire market, such as a single automobile factory supplying all the cars in a small economy. However, this scenario often leads to limited competition and consumer choice domestically.
International trade circumvents this by allowing companies to maintain low production costs through economies of scale while still offering a variety of products and robust competition. Notably, competition fosters innovation and responsiveness to consumer needs, as evidenced by the improvement in American cars due to pressure from East Asian and European carmakers. Moreover, international agreements can act as a counterbalance to protectionist measures, ensuring open markets and fostering dynamic comparative advantage.
Additionally, global awareness of products has increased due to reductions in trade barriers and advances in transportation and communication. This awareness can create demand in new markets for a company's products. Businesses must also consider that while competition can reduce profits and impact workers, the overall benefits to consumers and efficient businesses tend to outweigh the negatives, as the market generally rewards those offering better or less expensive products. Finally, the material gains and educational levels are underlying factors influencing preferences toward globalization and market liberalization.