Question

Carolina Furniture Inc. is concerned with the possibility of high transportation costs and the threat of tariff barriers when entering into a foreign market. Based on this, which entry mode should the furniture company avoid?

Answer 1

exporting

Step-by-step explanation:

When a company exports, it will directly sell its goods to an international trading company that is responsible for the marketing activities in the foreign country. This option is very common when companies want to reduce risks because the trading company acquired title of the goods, but also is the least effective way of entering a foreign market.

The other options that the company could carry out are:

• foreign direct investment: they open their operations in a foreign country
• joint venture: they join resources with a domestic company in the foreign market
• licensing: they sell the rights to produce and market their products in a foreign country in exchange for royalties.

Answer 2

The correct answer is exporting

Step-by-step explanation:

Exportation is selling of goods made in the country in the international market.The advancement in technological capability has made it possible for business counter-parties living in different continents or countries to trade .

Since the Carolina is trying to avoid incurring high transportation costs and high tariffs payments that naturally come with exporting, it would be nice to avoid exportation and stick to another means of selling internationally.

Another option would be capture other market segments locally in order to boost revenue.