2. Imperfect Markets Theory: factors of production are somewhat immobile providing incentive to seek out foreign opportunities.
If markets were perfect, the factors of production
(such as labor) were easily transferable.
The real world suffers from imperfect market
condition.
There are costs and often restrictions related to the transfer of labor and other resources used for production.
3. Product Cycle Theory: as a firm matures, it
recognizes opportunities outside its domestic
market.
Produce the product in foreign markets, thereby reducing its transportation costs.
Attempt to differentiate the product so that other competitors cannot offer exactly the same product.