Multiple Choice
Suppose that Swaziland decides to open trade with the rest of the world. If the world price of sugar is higher than Swaziland's domestic price, what is the likely effect on Swaziland's sugar market?
9. International Trade
Exporting and Importing
Multiple Choice
Which of the following is an advantage of using an export strategy to build a business in international markets?
A
It requires establishing manufacturing facilities in each target country.
B
It guarantees complete control over foreign distribution channels.
C
It allows firms to enter foreign markets with lower initial investment costs.
D
It eliminates all risks associated with currency fluctuations.
Verified step by step guidance1
Step 1: Understand the concept of an export strategy. An export strategy involves selling domestically produced goods to foreign markets without establishing physical operations like manufacturing plants abroad.
Step 2: Identify the typical characteristics of export strategies, such as lower initial investment costs because firms do not need to build facilities or infrastructure in the target country.
Step 3: Compare export strategies with other international market entry methods, like foreign direct investment, which require higher capital and operational commitments.
Step 4: Recognize that export strategies do not guarantee complete control over foreign distribution channels, as firms often rely on intermediaries or partners in the target market.
Step 5: Note that export strategies do not eliminate risks such as currency fluctuations; these financial risks still exist and must be managed separately.
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