Final answer:
Firms may deal with global threats by entirely avoiding international markets, focusing on developed countries, niche markets, or acquiring established foreign firms. These strategies are influenced by various factors including global competition, environmental regulations, and national security concerns.
Step-by-step explanation:
In the face of global risks and threats, firms may adopt various strategies to maintain cautious growth in international markets. These strategies include avoiding global markets entirely, expanding solely to developed countries, pursuing global niche markets, or acquiring established firms in foreign markets. Each of these approaches corresponds to different levels of risk aversion and strategic planning considering variables such as environmental regulations, dependency on imports for essential products, wage disparities, and the challenges of competing with firms from countries with lower costs of living.
The chapter focuses on understanding the application of the demand and supply model in international trade while addressing concerns such as the evasion of environmental laws by multinational companies, job losses due to production relocation, dependency on imported goods with national security implications, and political responses that may include imposing restrictions on imports to protect national interests.