Final answer:
Earth Movers Inc. is entering the European market through a wholly owned subsidiary, which allows full control over its operations and the application of specialized manufacturing skills within the scope of international trade and economies of scale.
Step-by-step explanation:
Earth Movers Inc. is using the wholly owned subsidiary mode of entry for international expansion by planning to build and operate a new plant in Spain for its products sold in Europe. This strategy involves the company owning 100% of the subsidiary and thus retaining complete control over its operations, which can lead to greater coordination and quality control. Economies of scale are relevant here as the production of large-scale equipment requires substantial upfront investment, but can result in cost savings through mass production. Additionally, by entering the European market through a wholly owned subsidiary, Earth Movers Inc. can apply its unique and different skills that have been developed in manufacturing specific types of machinery within the context of international trade and intra-industry trade.