Marginal analysis is an examination of the additional benefits of an activity compared to the additional costs incurred by that same activity. Companies use marginal analysis as a decision-making tool to help them maximize their potential profits.

Marginal utility, in economics, the additional satisfaction or benefit (utility) that a consumer derives from buying an additional unit of a commodity or service.

An economic rule governing production which holds that if more variable input units are used along with a certain amount of fixed inputs, the overall output might grow at a faster rate initially, then at a steady rate, but ultimately, it will grow at a declining rate.

Diminishing returns, also called law of diminishing returns or principle of diminishing marginal productivity, economic law stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield …

For example, if a factory employs workers to manufacture its products, at some point, the company will operate at an optimal level; with all other production factors constant, adding additional workers beyond this optimal level will result in less efficient operations.

Causes of Diminishing Marginal Returns

• Fixed Costs.
• Lower levels of Productivity.
• Limited Demand.
• Negative Impact on Working Envrionment.
• Short-run.

The three stages of short-run production are readily seen with the three product curves–total product, average product, and marginal product.

There are three important reasons for the operation of increasing returns to a factor:

• Better Utilization of the Fixed Factor: In the first phase, the supply of the fixed factor (say, land) is too large, whereas variable factors are too few.
• Increased Efficiency of Variable Factor:
• Indivisibility of Fixed Factor:

How to Find the Point of Diminishing Returns? The point of diminishing returns refers to the inflection point of a return function or the maximum point of the underlying marginal return function. Thus, it can be identified by taking the second derivative of that return function.

diminishing returns. the decrease in the marginal output of a production process as the amount of a single factor of production is increased.

d) rising, then falling, then rising long-run average cost curve. 37) When a firm doubles its inputs and finds that its output has more than doubled, this is known as: a) economies of scale.

Despite the diminishing returns, some organizations choose to stay open abroad due to various reasons and among them is to avoid uncompetitive taxation. That is because most countries only tax the income earned within their precincts thus operating abroad helps them to enjoy special tax exceptions.

3 risks of international expansion (and how to overcome them)

• Making the decision to take your business international is a significant one, and it’s not without risks.
• Corruption in international business.
• Managing foreign currency risks.
• Staying compliant in international accounting.

In general, companies go international because they want to grow or expand operations. The benefits of entering international markets include generating more revenue, competing for new sales, investment opportunities, diversifying, reducing costs and recruiting new talent.

Taking your business international allows you the opportunity to diversify your markets, so your revenue is more stable. Expanding abroad allows you to get out of a saturated market. Expanding abroad gives you access to new customers and in a market where your competitors do not operate.

3 main criteria: market attractiveness, risk, and competitive advantage Developing countries offer a unique set of opportunities and risks.

What Are The 7 Benefits of Going Global

1. New Revenue Potential. By taking your business global, you get access to a much larger base of customers.
2. The Ability to Help More People.
3. Greater Access to Talent.
4. Learning a New Culture.
5. Exposure to Foreign Investment Opportunities.
6. Improving Your Company’s Reputation.
7. Diversifying Company Markets.

Some of the negative impacts that marketing has faced when expanding globally include; competition among business enterprises, adapting to different foreign currencies, cultural deferences since some countries do not believe in the use of some products, lack of adequate capital, prolonged business registration …

Companies lack the size and the resources to go abroad. These companies may lack the resources for finding and managing overseas customers, partners, and suppliers. Some 15% feel international expansion is just too expensive to pursue.

Sell more products There’s no better way to grow your business then by selling more products. Going global can give you just that. 96% of the total world population is living outside of the US. This means that you’re limiting yourself to 4% of all the people in the world by if you’re not expanding outside of the US.

Going Global: 6 Factors to Consider

• Time Zones. Working across time zones can pose challenges when trying to schedule meetings or reviews.
• Language. One of the most important things to keep in mind when you’re communicating with your client is that the language you speak may not be their first language.
• Culture.
• Legalities.
• Payment.
• Communication.

When pondering if international expansion is right for you, consider these four factors:

• Culture. The cultural difference can determine whether the business is successful or not.
• Legal and regulatory barriers.
• Foreign government consideration.
• Business case.

We’ve outlined 8 main challenges for companies going global that will help prepare you for global expansion.

• The Physical Distance.
• Unfamiliar Cultures.
• Mastering Marketing.
• Organizational Communication.
• Tariffs and Export Fees.
• Human Resources.
• Choosing the Right Countries.

Different Challenges Faced by the Multinational Companies (MNC’s)

• Market Imperfections.
• Tax Competition.
• Political Instability.
• Market Withdrawal.
• Lobbying.