What is the third stage of entering a global market?

What is the third stage of entering a global market?

• A. The company begins exporting its products.
• B. The firm breaks its production process into pieces performed where it is most cost-effective.
• C. The company adapts its products to meet local tastes and regulations.
• D. The firm merges with local firms to gain distribution.

Answer: (B)

In expanding globally, firms move from selling what they make from home toward shaping a global production network. The third stage is to fragment the production process, locating different steps where they can be done most cost-effectively. This means parts of manufacturing or value-adding activities are moved to locations with lower costs or specialized capabilities, and then coordinated across borders to optimize the overall system. This focus on breaking up production and distributing tasks globally is why it’s the best fit for the third stage. Exporting is the initial entry method, while adapting products or pursuing mergers with local firms reflect later strategic moves or market-specific tactics rather than the typical third-stage progression.

In expanding globally, firms move from selling what they make from home toward shaping a global production network. The third stage is to fragment the production process, locating different steps where they can be done most cost-effectively. This means parts of manufacturing or value-adding activities are moved to locations with lower costs or specialized capabilities, and then coordinated across borders to optimize the overall system.

This focus on breaking up production and distributing tasks globally is why it’s the best fit for the third stage. Exporting is the initial entry method, while adapting products or pursuing mergers with local firms reflect later strategic moves or market-specific tactics rather than the typical third-stage progression.