Question

Pots and Pans Inc., a large U.S. kitchenware distributor, sells its inventory twice a year to CookWell Corp., a kitchenware retailer in the United States. CookWell, in turn, sells those products through its retail stores in Vietnam and Thailand. Which of the following is Pots and Pans most likely engaged in?

1) Franchising
2) Indirect exporting
3) A consortium
4) Direct foreign investment
5) A joint venture

Answer 1

Pots and Pans Inc. is engaged in indirect exporting by selling inventory to CookWell Corp., which then sells the products in Vietnam and Thailand, enabling Pots and Pans to benefit from international sales while avoiding complexities of direct exporting.

Step-by-step explanation:

In the scenario described, Pots and Pans Inc. is most likely engaged in indirect exporting. Indirect exporting occurs when a company sells its goods to an intermediary in its own country, which then exports the goods to a retailer or customer in another country.

In this case, Pots and Pans Inc. is selling its kitchenware inventory to CookWell Corp., a retailer which then sells these products in its retail stores located in Vietnam and Thailand. This practice allows Pots and Pans Inc. to enter foreign markets without the need for a direct presence or dealing with the complexities of international trade logistics, customs, and regulations that are typically involved with direct exporting.

The company benefits from international sales while minimizing the challenges associated with establishing and managing a global distribution network.