A major advantage of using export strategies to enter international markets is that:

• A. firms gain complete control over foreign market operations.
• B. firms can avoid the high costs and risks associated with establishing production facilities abroad.
• C. exporting eliminates all trade barriers and tariffs.
• D. firms are guaranteed to achieve economies of scale in every foreign market.

Answer: (B)

Verified step by step guidance

1. Step 1: Understand the context of the question, which is about the advantages of using export strategies for entering international markets. Exporting means selling domestically produced goods to foreign markets without establishing production facilities abroad.
2. Step 2: Analyze the first option: 'firms gain complete control over foreign market operations.' Consider that exporting typically involves less direct control compared to establishing subsidiaries or joint ventures, so this is unlikely to be a major advantage of exporting.
3. Step 3: Examine the second option: 'firms can avoid the high costs and risks associated with establishing production facilities abroad.' Exporting allows firms to enter foreign markets without investing in physical production facilities, which reduces upfront costs and risks.
4. Step 4: Review the third option: 'exporting eliminates all trade barriers and tariffs.' This is generally incorrect because exporting often faces tariffs, quotas, and other trade barriers imposed by the importing country.
5. Step 5: Consider the fourth option: 'firms are guaranteed to achieve economies of scale in every foreign market.' Economies of scale depend on production volume and cost structure, and exporting alone does not guarantee this in every market.