Final answer:
For a startup manufacturing company to achieve economies of scale and compete globally, the most feasible approaches are licensing or forming a joint venture. These strategies help reduce costs and risks associated with distant markets while leveraging international trade benefits like larger-scale production, competition, and product variety.
Step-by-step explanation:
Understanding international trade is crucial for a startup manufacturing company looking to achieve advantage of economies of scale and to compete in global markets. Economies of scale refer to the benefits a company obtains when production becomes efficient, as costs per unit decrease with the increase in the scale of production. This can be especially beneficial to small economies that can produce a large enough output to take full advantage of economies of scale and then export most of it. Exporting allows a country to focus on manufacturing certain products efficiently and in greater volume, thereby lowering production costs. It also facilitates competition and offers variety, as the country can also import goods from overseas producers, ensuring that local consumers have access to different brands and types of products.
For a startup with limited working capital exploring strategic partnerships for growth, the most feasible approach would likely be b. licensing or c. joint venture. Licensing would allow the firm to grant rights to another company to produce or sell its products, thereby reducing the need for large capital investments in foreign markets. A joint venture would enable the startup to partner with a foreign firm to share costs, risks, and leverage local market knowledge.
Taking into account the concept of economies of scale, international trade enables producers to supply large markets beyond their own country borders. This is beneficial not just in reducing unit costs through larger-scale production but also in promoting competition and choice for consumers. Hence, small economies and startups can greatly benefit from strategically entering the global market, either through setting up a subsidiary, exporting, licensing, or forming joint ventures.