If you were a manager of a firm that manufactures shoes, which of these options would you choose to venture into international business and why? A- Exporting, B- Contract Manufacturing?
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Answers
The method chosen will be exporting.
- Exporting is an efficient way to enter into international market. Further, the manager must consider it as -
1. It requires less management as firm is not required to invest much time and money.
2. There is a minimal risk in foreign transactions as much of investment is not required. The good can be produced in bulk and sent,
3. In a self-manufacturing sector, the international company would contribute a larger portion of the equity. As a result, small and medium businesses consider it a viable choice for entering the international market.
Explanation:
Among the two options given, for a manager to expand his business at international level and being a direct manufacturer, the preferred choice is option A i.e Export.
Export is one way where one will reach international market and competition directly as well as export business tends to add a security layer in business as well. This also yields more profit when compared to outsourcing your production but it also needs more attention in business