Quiz 15: International Small Business

Business

Synopsis of case study: • RH, president of H springs, started a new banana business in the farm. He had a heavy loss in that business. • Later, he decided to shut down the business since the prices of banana were declining. • He delivered this news to his 9 full-time banana pickers. • Before closing down the banana firm, he calculated the cost of operations and profitability on a weekly basis. It showed profit in a downward trend. • Later, he came to know that his full-time employees made their case. • The employees argued to H that they could run the operations with fewer workforces and earn 10% more profit per acre. H found some factors that affect the business. • The prices were declining continuously because of fluctuation in dollars. • H found that higher prices and lower costs could give high profit margin. Pros of H worker's proposition: The following are the pros of H worker's proposition: • It gives an idea to determine the root cause of the problem. • It insists the employer to calculate the cost of operations and profitability on a weekly basis. Cons of H worker's proposition: The following are the cons of H worker's proposition: • High risk and lesser profitability • Increases the costs of operation • Leads to shut down the business

Internet in international trade for small businesses: New technologies are redesigning international trade especially for small businesses. The following are the benefits of using internet on the international trade standards: • It helps in analyzing the flow of goods and payments between two or more countries. • It helps to increase overall global and economic growth. • It increases overall growth of international trade (import and exports of goods and services) • It reduces the barriers to entry for small businesses in developing countries. • It increases the nontariff barriers on international trade. Licensing requirements of import, product quality conditions, and other conditions are considered to be as nontariff barriers to international trade.

Direct exporting: Direct exporting is the process of exporting that sells products directly to the end customers without any intermediaries. Advantages of direct exporting: The following are some of the advantages of direct exporting: • It sustains the control over the process of exporting. • Service fees or commission will be less. • It is more efficient since selling is made directly to the final consumer. • It helps to identify the potential export market for better understanding of the marketplace. • It helps to maintain better relationship with the consumer. Disadvantages of direct exporting: The following are the disadvantages of direct exporting: • It is more expensive and time-consuming. • Exporters should handle more logical transactions. • Level of risk is high. Indirect exporting: Indirect exporting is the process of exporting by using intermediaries. Intermediaries are more responsible for collecting payments from the customer under this method. Advantages of indirect exporting: The following are some of the advantages of indirect exporting: • It helps to minimize the financial and personnel resources to enhance international sales. • It reduces the levels of risk and investment by using intermediaries to increase the profits. Disadvantages of indirect exporting: The following are some of the disadvantages of indirect exporting: • Export service fees minimizes profit margin of the company. • Price may increase due to intermediaries. • It is more expensive and riskier and also requires more resources and sales support. • There is no direct contact with the end customer.

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