Efficiency-Seeking Motives

International expansion enables the firm to achieve economies of scale. International expansion allows the firm to increase sales and employ company assets across a larger number of products and markets. As the quantity of productive output increases, the per-unit cost of production tends to decline. In turn, profits rise as the firm’s average cost of operations falls. Similarly, with increasing output, the per-unit cost of other productive activities declines—R&D, marketing, distribution, and customer support.

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