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Discuss the Advantages and Disadvantages of International Trade for Elecrox PLC

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Introduction

Transfer-Encoding: chunked If was a director on the board for the company Elecrox PLC, I would need to decide whether this firm would benefit from manufacturing abroad or if it would be more worthwhile to continue production in Britain. Within this essay, I will be discussing the advantages and disadvantages of international trade/production for Elecrox PLC. Then, I will evaluate the pros and cons of international production for Elecrox PLC before concluding whether international production would be more useful and strategic for the company or otherwise, not. Advantages: If the company Elecrox PLC were to manufacture their goods abroad, they could produce each of their individual electrical appliances at a cheaper cost (appliances such as fridges, kettles, irons, ovens?) as countries such as China and India have cheaper labour available due to a lower and more affordable living wage threshold. This is because both India and China have a population in excess of 1 billion inhabitants which suggests that there is a constant supply of labour which means that it is cheap. ...read more.

Middle

If Elecrox PLC don?t manufacture abroad, they run the risk of being overshadowed by larger and more competitive businesses which offer a similar service. This could consequently mean that the company don?t earn enough of an income to make a profit and pay all its cost (e.g. wages, rent, transport?) and therefore, the company may have to shut down and liquidate. Finally, international trade would benefit Elecrox PLC due to the theory suggested by Ricardo (a classical economist) of comparative advantage. Comparative advantage is when is the principle that all parties can benefit from international trade when goods are produced at differing relative cost. Elecrox PLC will produce their various appliances at altering process at it is obvious that a fridge will cost more than an iron to manufacture for example. Disadvantages: On the other hand, international trade mightn?t benefit Elecrox PLC as, when production is situated abroad, the different culture, time zones and skills of the new employees may cause communication issues between the original base in England and the manufacturing factory abroad. ...read more.

Conclusion

Also, Elecrox PLC may not want complete their manufacturing abroad is due to the fact that the company may be deemed to have lost its originality and its British origins and hence, this may not appeal to people in Britain who may feel that the company are maximising on profits rather than exclusivity. Finally, Elecrox may not want to manufacture abroad as the people who have already been employed in England will lose their jobs. If this occurs, people may question the moral section of the company and therefore, the company may lose customers as the ethical values of the business is being overlooked. In my opinion, I believe that Elecrox PLC should manufacture their goods abroad as the overall outcome of their decision will ensure them to gain bigger profits and therefore, they could stamp their authority in the electrical appliance market by becoming a much larger retailing by delivering internationally. Furthermore, with this larger profit, the company can pay their staff a higher wage which would compensate for initially making their British manufacturing workers redundant. ...read more.

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