Which of the following is a primary reason a company might choose to enter a foreign market?

• A. To reduce its product quality
• B. To avoid economies of scale
• C. To increase domestic competition
• D. To access new customers and expand its sales base

Answer: (D)

Verified step by step guidance

1. Step 1: Understand the concept of market entry in microeconomics, which involves a company expanding its operations into a new geographic area, often a foreign market.
2. Step 2: Recognize that companies enter foreign markets primarily to increase their potential customer base, which can lead to higher sales and profits.
3. Step 3: Evaluate the options given: reducing product quality is generally not a strategic goal; avoiding economies of scale contradicts the goal of cost efficiency; increasing domestic competition is not a reason to enter foreign markets.
4. Step 4: Identify that accessing new customers and expanding the sales base aligns with the goal of growth and market expansion, which is a common and primary reason for entering foreign markets.
5. Step 5: Conclude that the correct reason for entering a foreign market is to access new customers and expand the sales base, as this drives revenue growth and business development.