Question

What risk do firms encounter from the globalization of production and markets

Answer 1

Answer:

Firms encounter some risks when globalization of production and markets take place. When the transactions across borders take place, they tend to pose some disadvantages to firms. For instance,

- Domestic firms start making less business for themselves

-some firms have controlled by outsider firms like multinationals which then dominate their role. ( Developed firms dominate over the less developed firms)

-Small scale firms are driven out of market via loss leaders. They can't handle the competition.

-Complications increase in case of legislation. Example: Pakistan will suffer from laws made by Chinese companies too, due to their closely knit network.