An international firm considering foreign expansion should take into account that:

• A. differences in legal and regulatory environments may affect business operations
• B. transportation costs are negligible in global trade
• C. exchange rates remain constant over time
• D. all countries have identical consumer preferences and market structures

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the context of international business expansion, which involves operating in different countries with varying economic, legal, and cultural environments.
2. Step 2: Recognize that differences in legal and regulatory environments can impact how a firm operates abroad, including compliance costs, restrictions, and business practices.
3. Step 3: Evaluate the other options: transportation costs are generally not negligible in global trade, exchange rates fluctuate over time, and consumer preferences and market structures differ across countries.
4. Step 4: Conclude that the most important factor for an international firm to consider is the variation in legal and regulatory environments, as these directly affect business operations.
5. Step 5: Summarize that understanding these differences helps firms adapt strategies, manage risks, and comply with local laws, which is crucial for successful foreign expansion.