International operations can reduce a firm’s costs by generating economies of scale that it would not otherwise enjoy or by giving a firm access to low-cost labor and/or raw materials. The first of these strategies involves mostly exporting products made in a firm’s home country to a nondomestic market while the second involves mostly importing products made outside a firm’s home market to its home market. Describe the differences between these two strategies in terms of the types of investments that firms following these two strategies must make in their nondomestic markets and the different management control problems these firms are likely to face.

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Difference between the strategies in terms of investments If we manufacture the products right along ... View the full answer