Question

Which of the following make up the three major objectives that underlie the reasons for engaging in international business?Expandingsales,acquiringresources,and reducing risk

Answer 1

1. Expanding sales: expanding globally will increase total revenue, since more than 90% of the world's population lives outside the US.
2. Acquiring resources: cheap raw materials and cheap labor are abundant in foreign countries, and US firms have excess capital to invest.
3. Reducing risk: Companies are less vulnerable to periodic fluctuations in the American economic cycle, it is similar to diversification in the stock market, if you only invest in one market you are putting all your eggs in one basket.