Harley Davids Inc. a U.S. firm, produces some components parts for motor bikes that are manufacturedand sold in the United States. The company's production process is very efficient and cheaper than some of its U.S.competitors. It controls over 70% of the market in the U.S. and although its labour costis 80% of its overall cost, it is significantly less than its U.S. counterparts. The labour force is not unionized but the company has committed not to make any of its workers redundant.The chief operating officer (COO) believes that the company should expand its operations to The Dominican Republic for the following reasons:

1. The U.S. market is saturated so the logical progression is to seek foreign markets.

2. The competition will be limited in The Dominican Republic as motor bikes are not very

popular there.

Which international business theories are being used to justify the expansion? Do you agree

with the COO?

Would you support the expansion if the Dominican peso suffered a substantial loss in value and political risks were at a minimum?