What best describes the motive for multinational companies to expand production abroad?

What best describes the motive for multinational companies to expand production abroad?

• A. To reduce profits
• B. To access cheaper inputs and new markets
• C. To limit growth
• D. To avoid competition

Answer: (B)

Expanding production abroad is driven by the goal of lowering costs and reaching more customers. By producing in other countries, a multinational can access cheaper inputs like labour and materials, and often benefit from favorable conditions that reduce unit costs. At the same time, moving into new markets allows the firm to sell to more customers, grow sales, and diversify risk. This combination—lower inputs and access to new markets—explains why expanding production overseas is a common motive for multinationals. The other options don’t fit because reducing profits, limiting growth, or avoiding competition are not objectives of expansion; firms typically aim to increase profits and market presence.

Expanding production abroad is driven by the goal of lowering costs and reaching more customers. By producing in other countries, a multinational can access cheaper inputs like labour and materials, and often benefit from favorable conditions that reduce unit costs. At the same time, moving into new markets allows the firm to sell to more customers, grow sales, and diversify risk. This combination—lower inputs and access to new markets—explains why expanding production overseas is a common motive for multinationals. The other options don’t fit because reducing profits, limiting growth, or avoiding competition are not objectives of expansion; firms typically aim to increase profits and market presence.