Why might setting up production facilities abroad lead to expanded sales in local markets?
What will be an ideal response?
Answer: When a firm such as a multinational produces abroad, it can more easily monitor market developments, adapt its products and production schedules, and provide more comprehensive after-sales services. Establishing local production facilities also demonstrates a greater commitment to the local citizens and the markets. It can also assure a stable supply of resources. This is particularly important for firms who produce intermediate goods for sale to other countries.
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