Which of the following is a reason for international expansion of a business?
(A) To find new markets
(B) To ensure business efficiency
(C) To maximise competitive risk
(D) To achieve diseconomies of scale - HSC - SSCE Business Studies - Question 3 - 2006 - Paper 1
Question 3
Which of the following is a reason for international expansion of a business?
(A) To find new markets
(B) To ensure business efficiency
(C) To maximise competitiv... show full transcript
Worked Solution & Example Answer:Which of the following is a reason for international expansion of a business?
(A) To find new markets
(B) To ensure business efficiency
(C) To maximise competitive risk
(D) To achieve diseconomies of scale - HSC - SSCE Business Studies - Question 3 - 2006 - Paper 1
Step 1
To find new markets
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Answer
International expansion primarily allows businesses to access new markets. By entering different geographical areas, companies can tap into a broader customer base, diversifying their revenue streams and reducing dependency on domestic markets.
Step 2
To ensure business efficiency
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Answer
While efficiency can be enhanced through international expansion due to economies of scale, this is not the main reason for such an initiative. The focus should be on market access rather than operational efficiency as a primary driver.
Step 3
To maximise competitive risk
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Answer
This option is misleading as maximising competitive risk is generally not a goal for businesses. Instead, they typically seek to minimize risks associated with competition through international growth.
Step 4
To achieve diseconomies of scale
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Answer
Achieving diseconomies of scale is usually counterproductive. Businesses expand internationally to achieve economies of scale, not the opposite. Therefore, this choice does not reflect a valid reason for expansion.
