Final answer:
H-O Theory explains the source of international business opportunities as being rooted in the variations of resource endowments between countries. It illustrates how small economies benefit from economies of scale and increased competition due to trade. Nonetheless, governments might intervene in trade to address environmental and security concerns.
Step-by-step explanation:
Heckscher-Ohlin Theory (H-O Theory) posits that countries will specialize and export goods that utilize their abundant and cheap factors of production while importing goods that require resources that are scarce or expensive domestically. In essence, the source of business opportunities in international markets arises from differences in resource endowments between countries which create comparative advantages. For instance, a country with an abundance of natural resources but limited skilled labor might find opportunities in exporting raw materials while importing high-tech manufactured goods.
Moreover, international trade enables even a small economy to leverage economies of scale, reducing the cost per unit by increasing production, which might not be feasible solely for its domestic market. Additionally, having multiple international producers fosters competition, increases the variety of products available, and contributes to economic efficiency and consumer choice. This dynamic plays a crucial role in global business strategies, as it shapes how countries create and exploit international business opportunities. However, environmental and security concerns may influence government policies on trade, safeguarding national interests by regulating imports.