When a company expands its sales volume through international expansion, it can realize cost savings from economies of scale through all of the following except:
A)spreading fixed costs over its global sales volume.
B)utilizing its production facilities more intensely.
C)increased bargaining power with its suppliers.
D)learning effects associated with higher volume.
E)adopting high cost structures.

Question

Quizplus · Accepted Answer

Adopting high cost structures is not a way for a company to realize cost savings from economies of scale through international expansion. Rather, the company should be looking to spread fixed costs over its global sales volume, utilize production facilities more intensely, increase bargaining power with suppliers, and benefit from learning effects from higher volume.

When a Company Expands Its Sales Volume Through International Expansion