Which of the following is a reason why firms expand internationally?

• A. To access new markets and increase sales
• B. To avoid all government regulations
• C. To reduce competition in their domestic market
• D. To eliminate the need for product innovation

Answer: (A)

Verified step by step guidance

1. Understand the motivations behind why firms choose to expand internationally. Firms often look for opportunities that can enhance their growth and profitability.
2. Consider the option 'To access new markets and increase sales.' Expanding internationally allows firms to reach customers beyond their domestic borders, potentially increasing their revenue streams.
3. Evaluate the option 'To avoid all government regulations.' While firms may seek regulatory advantages, it is unrealistic to expect to avoid all regulations when operating in foreign countries, as each country has its own rules.
4. Analyze the option 'To reduce competition in their domestic market.' Expanding abroad does not necessarily reduce domestic competition; competitors may also expand internationally or remain active domestically.
5. Review the option 'To eliminate the need for product innovation.' International expansion does not remove the need for innovation; in fact, firms often need to adapt or innovate products to meet diverse market preferences.