Which of the following is a disadvantage of globalizing operations?

• A. Access to larger markets
• B. Ability to benefit from economies of scale
• C. Exposure to exchange rate fluctuations
• D. Improved access to advanced technology

Answer: (C)

Verified step by step guidance

1. Understand the concept of globalization in microeconomics, which involves expanding a firm's operations across international borders to access larger markets, benefit from economies of scale, and access advanced technology.
2. Identify the advantages of globalization, such as access to larger markets, economies of scale, and improved technology, which generally help firms grow and reduce costs.
3. Recognize that a disadvantage of globalization is the exposure to exchange rate fluctuations, which can create uncertainty and financial risk for firms operating in multiple currencies.
4. Analyze why exchange rate fluctuations are a disadvantage: they can affect the cost of inputs, pricing of products, and ultimately the profitability of international operations.
5. Conclude that among the options given, 'Exposure to exchange rate fluctuations' is the correct disadvantage of globalizing operations, while the others are advantages.