What is a disadvantage of countertrade?
A) Countertrade contracts may involve the exchange of unusable or poor-quality good.
B) Countertrade requires the firm to use an out-of-house trading company to which much of the profit will go.
C) Countertrade contracts often involve high-quality, expensive goods that the firm cannot move enough of to be profitable.
D) Countertrade requires employing lawyers who specialize in these unique types of contracts.

Question

Quizplus · Accepted Answer

There are several reasons a firm might avoid countertrade. Countertrade contracts may involve the exchange of unusable or poor-quality goods that the firm cannot dispose of profitably. In addition, even if the goods it receives are of high quality, the firm still needs to dispose of them profitably. Countertrade requires the firm to invest in an in-house trading department dedicated to arranging and managing countertrade deals in order to maintain a profit. An in-house trading department dedicated to arranging and managing countertrade deals can be expensive and time-consuming.

What Is a Disadvantage of Countertrade