Describe the advantages and disadvantages of exporting.
What will be an ideal response?
Student answers will vary but should show accurate knowledge of the benefits and drawbacks to exporting. The advantages of exporting are that it (1) provides scale economies by avoiding the costs of manufacturing in other countries and (2) is consistent with a pure global strategy. By manufacturing the product in a centralized location and then exporting it to other national markets, the company can realize substantial scale economies from its global sales volume. However, exporting has a number of drawbacks. First, other countries might offer lower-cost locations for manufacturing the product. A second drawback of exporting is that high transportation costs can make it uneconomical, particularly for bulk products. A third drawback is that host countries can impose (or threaten to impose) tariff barriers. Trade arrangements described earlier, including the World Trade Organization, NAFTA, and APEC, work to minimize this risk.
You might also like to view...
A company is referred to as a diversified company or a conglomerate if it operates in
A) many related industries. B) many unrelated industries. C) many and varied locations throughout the world. D) one single major industry.
Qualitative factors are considered in the evaluation of capital investment proposals
Indicate whether the statement is true or false
Which of the following statements about customer relationships is true?
A) Customers who are not profitable at the beginning of a relationship are highly unlikely to become profitable. B) Small increases in customer retention rate can translate into substantial increases in a company's profits. C) Today's successful companies are more likely to take a transaction-based view than a relationship-based view. D) It costs more to retain existing customers than to recruit new customers. E) Relationship marketing focuses only on those customers who are currently profitable.
Syed Iqbal agrees to purchase a house on a hill overlooking a lake from Savia Jahangir for $300,000. The transaction is to close in two months
Just after the agreement is signed, the housing market increases dramatically so that the house is now worth $600,000. Syed wants the house; Savita refuses to complete the deal. Syed does locate a similar house for $600,000, although it lacks the unique view of Savita's house and is not right on the lake. Which of the following statements is true about the remedies available to Syed for breach of contract? A) Syed can seek a court order directing Savita to complete the sale. B) Syed can only purchase the replacement house and obtain an order that savita pay for the additional cost ($300,000). C) Syed can obtain an order requiring Savita to pay the entire value of the replacement house, $600,000. D) Syed can sue for both specific performance and damages of $300,000. E) Syed had a duty to mitigate his damages, so he can obtain only nominal damages from savita.