International Business : Doc
Added on 2021-06-18
9 Pages2209 Words25 Views
Languages and CultureEconomics
|
|
|
Running head: International BusinessInternational BusinessName of the StudentName of the UniversityAuthor Note
1International BusinessContentsAnswer 1:...................................................................................................................................2Answer 2:...................................................................................................................................3Answer 3:...................................................................................................................................4Answer 4:...................................................................................................................................5References:.................................................................................................................................7
2International BusinessAnswer 1: According to the free trade theory, retailers should be able to import clothing from themost efficient country based on its cost affectivity, and regardless of where they are locatedin the globe (Feenstra 2015). Russel Brands is a leading manufacturer of sportswear, and itscompetitors include Nike, Adidas, Zara and Benetton. The company however does not have aloyal customer base due to which it is unable to charge premium prices for its product. Henceto cut cost, the company considered contracting Kangwei from China to manufacture andmarket the product in that region. With the passage of Dominican Republic Central AmericanFree Trade Agreement (DR-CAFTA) in 2005, the barriers between USA and six LatinAmerican countries, this offered several benefits to Russel Brands. Firstly, this allowed tradetariffs to be virtually eliminated to the trade republic, and thus enabled Russel Brands tosource the raw materials in Central America, manufacture the fabric in United States, andsend the fabric to Honduras for assembly and the completed garments can then be re-exportedto USA for distribution and sales (Estevadeordal and Talvi 2016). Doing so allowed theprocess of procuring raw materials and the production of the finish product to be done inclose proximity to the markets in US. Without the DR-CAFTA and with the Multi FiberAgreement (MFA) in Central America, China was taking over the market, with its cheapproducts, which was made possible due to the lower wages paid to Chinese Textile workersand the lower value of the Chinese currency, which artificially reduced the price of itsproducts (Chaudhary 2011). The market share of Chinese companies before DR CAFTA alsoincreased significantly across many sectors of the textile industry, such as their share offinished clothing products, sock manufacturing and apparel markets. Thus, allowing freetrade to take its natural course would have resulted in China taking over significant shares ofthese markets, and seriously jeopardized the sustenance of the Textile Industries in thewestern hemisphere (Nimon and Beghin 2017). While DR-CAFTA actually allowed the
End of preview
Want to access all the pages? Upload your documents or become a member.