Final answer:
It is true that small businesses can diversify risk by expanding globally, allowing them to reach more customers and benefit from economies of scale and market variation.
Step-by-step explanation:
In the realm of Business, it is true that a small business might expand globally to help diversify its risk by reaching more buyers. Expanding into global markets allows businesses to access a larger customer base and can lead to economies of scale, where the cost per unit decreases as production scales up. Moreover, being present in multiple markets can mitigate the business's risk exposure to local economic downturns or domestic market saturation.
International trade introduces additional benefits as it enables even small economies to leverage economies of scale, drawing from a global pool of consumers. This expansion fosters competition and offers consumers a wider variety of products from different producers. Businesses can grow by reinvesting profits into new areas, but they must also be aware of the challenges posed by mergers and the increased competition brought about by globalization and advancements in communication and information technology.