Discuss the Advantages and Disadvantages of International Trade for Elecrox PLC

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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. If Elecrox PLC were to manufacture their items in Britain, they would have to pay their workers at least the minimum wage of approximately £6,000 a year which is a lot more than the wages in other countries which have been mentioned above. Another factor which Elecrox PLC would benefit from if they committed to manufacturing their products abroad, is that the expense of raw materials will be reduced as natural resources are found more easily and more abundantly in countries such as China, Brazil and Saudi Arabia than in England. These two factors combined means that if Elecrox PLC manufacture abroad, there can sell their goods at a greater profit margin which will mean that the company will be able to become wealthier. This additional income to the company can allow them to spend more money into research & development and advertising/marketing which will allow Elecrox PLC to make an even larger profit but also, they will create awareness for their brand and trade purposes which will mean that they will develop a larger customer database.

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Another reason why Elecrox would find it beneficial to manufacture abroad is because they would be able to exploit the use of modernised transportation systems to ship and delivery their goods worldwide which would increase the company’s assessability range and hence, it will increase their profits. 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 ...

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