Internationally diversified firms: a. are more likely to produce below-average returns for investors in the long run. b. may need to decrease international activities when domestic profits are poor. c. earn greater returns on their innovations through larger or more numerous markets. d. are generally unable to achieve high levels of synergy because of differences in cultures.

Question

Business

Opie

7 February, 18:44

Internationally diversified firms: a. are more likely to produce below-average returns for investors in the long run. b. may need to decrease international activities when domestic profits are poor. c. earn greater returns on their innovations through larger or more numerous markets. d. are generally unable to achieve high levels of synergy because of differences in cultures.

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Gustavo Leach · Answer 1

The correct option is C, internationally diversified firms earn greater returns on their innovations through larger or more numerous markets

Explanation:

Internally diversified firms are businesses that have presence in different economic and political regions of the world such that adverse impact in one market can be netted off against the impressing business performance in another market, overall the return is optimized as against a business whose presence is only in the domestic market, exposed to market uncertainties in that market.

Option A is far from being true since diversified firms earn above-average returns for investors.