Which of the following is a concern as firms move toward globalization?

• A. Decreased need for innovation
• B. Increased exposure to international competition
• C. Lower potential for economies of scale
• D. Reduced access to new markets

Answer: (B)

Verified step by step guidance

1. Understand the concept of globalization in the context of firms: globalization refers to firms expanding their operations and markets beyond their domestic borders to operate internationally.
2. Identify the typical effects of globalization on firms, such as increased market access, potential for economies of scale, and exposure to international competition.
3. Analyze each option in the problem: 'Decreased need for innovation' is generally incorrect because globalization often increases the need for innovation to stay competitive globally.
4. 'Lower potential for economies of scale' is also incorrect because globalization usually increases the potential for economies of scale by expanding production and sales.
5. Recognize that 'Increased exposure to international competition' is a valid concern because as firms globalize, they face more competitors from different countries, which can increase competitive pressure.