Question at position 14 Which of the following is NOT an incentive for firms to become multinational?To gain access to consumers in emerging marketsTo gain easier access to raw materialsTo avoid high domestic taxation on corporate incomeOpportunities to integrate operations on a global scale

Question

BlackTom AI · Accepted Answer

1. Relevant knowledge points and concepts
Firms become multinational for identifiable motives: market-seeking (access consumers), resource-seeking (access raw materials), efficiency-seeking (lower costs, economies of scale), strategic-asset-seeking (acquire technology or brands), and tax-minimization (lower corporate taxes). Distinguish between “incentives” (reasons that drive a firm to enter foreign markets) and “capabilities or strategies” (things a firm can do once it is multinational).

2. Step-by-step reasoning
- Option A (gain access to consumers in emerging markets) maps directly to market-seeking motive. Firms enter foreign markets to increase sales and reach new customer bases — clearly an incentive.
- Option B (gain easier access to raw materials) is resource-seeking: locating production or affiliates where inputs are cheaper or available is a classic incentive.
- Option C (avoid high domestic taxation on corporate income) is tax-minimization: shifting profits or locating entities in low-tax jurisdictions is a well-documented incentive for multinational activity.
- Option D (opportunities to integrate operations on a global scale) describes a strategic capability or post-entry strategy: once a firm is multinational it can coordinate production, R&D, and distribution across borders to exploit scale and scope. That capability is often the result of being multinational, not a separate primary reason to become one.

3. Intermediate conceptual steps
- Identify whether each choice explains why a firm would first choose to go abroad (incentive) vs. what it might do after establishing a multinational presence (capability/strategy).
- A–C clearly answer “why go abroad.” D describes an operational approach enabled by multinational status (integration), which is typically undertaken after entry to realize efficiency benefits.

4. Why the correct answer is correct
“Opportunities to integrate operations on a global scale” is best seen as an outcome or strategic option available after becoming multinational rather than a primary incentive to become one. The other three are direct motives that prompt international expansion.

5. Why the other options are incorrect
They are incorrect choices for “NOT an incentive” because each (A, B, C) is a recognized primary motive: market access, resource access, and tax minimization respectively.

6. Conclusion
Therefore, the option that is NOT an incentive (it is a capability/outcome instead) is “Opportunities to integrate operations on a global scale,” matching the provided answer.

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