In determining why a firm becomes multinational there are many reasons

Business Dec 10, 2020

In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a knowledge seeker. They operate in foreign countries to exploit existing technological expertise.

a. True

b. False

Expert Solution

The answer is B. False.

Firms become multinational to gain access to the low production costs, such as taking advantage of the low costs of raw material purchase and low labor costs. The low cost of services leads to an efficient and inexpensive supply chain, leading to increased returns. They also aim to access a larger talent pool worldwide, allowing the company to have the best technical knowledge and innovative thinking. Additionally, they also do so to be closer to their target markets internationally, which helps minimize transportation costs and increases its market share.

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