RedLeaf Goods and Co. has been producing and supplying its designer footwear in its home country for almost a decade. It has not expanded internationally because of various reasons. However, when Linda Goodmen joins the company as its chief operating officer, she calls the members of the management for a meeting and suggests that the company should enter foreign markets. The management votes for export as an entry mode; however, Linda is not thoroughly convinced by the idea as she sees a disadvantage in using export as an entry mode among the other options. Which of the following is most likely the disadvantage that Linda foresees in this scenario?
A) The company will need to make a massive infrastructure investment.
B) The company will not be able to function with flexibility when sales go up or down.
C) The company will not be able to quickly move down the learning curve.
D) The company will have to pay for import tariffs.

Question

Quizplus · Accepted Answer

Exporting often involves paying import tariffs in the destination country, which can increase the cost of goods sold abroad and potentially make products less competitive in foreign markets. This is a common disadvantage associated with exporting as an entry mode into international markets.