Which of the following is a likely reason why companies expand into developing markets?

• A. To decrease their exposure to international trade regulations
• B. To avoid competition and operate as monopolies
• C. To access new customer bases and increase sales
• D. To reduce production costs by using advanced local technology

Answer: (C)

Verified step by step guidance

1. Step 1: Understand the context of the question, which asks why companies expand into developing markets. This involves considering typical business motivations for entering new geographic regions.
2. Step 2: Analyze each option by relating it to common economic and business principles. For example, consider how expanding into developing markets affects customer base, competition, costs, and regulations.
3. Step 3: Recognize that companies often expand into developing markets primarily to access new customer bases, which can lead to increased sales and revenue growth. This is a fundamental market expansion strategy.
4. Step 4: Evaluate why other options are less likely: decreasing exposure to international trade regulations is usually not a primary reason, avoiding competition to become monopolies is unrealistic in open markets, and reducing production costs by using advanced local technology is less common in developing markets where technology may be less advanced.
5. Step 5: Conclude that the most plausible and widely accepted reason is to access new customer bases and increase sales, aligning with standard microeconomic reasoning about market expansion and demand growth.