Organic Towel Exports (Scenario)

The Organic Towel Company (OTC) employs 400 workers at its facility in Liverpool, England, where the firm has been manufacturing 100% organic cotton towels for five years. OTC sells towels in the United Kingdom primarily to boutique hotels and specialty retail stores, as well as to individual consumers through the company's website. Recently, OTC managers attended a trade show in London where they made contact with numerous foreign market managers. OTC received a request from Earth Waves, an organic clothing store in Toronto, Canada for a large order of towels. OTC had not been looking into expanding, but firm managers are seriously considering the opportunity to reach a global niche market with their towels.

1) Which of the following questions would most likely be more important for OTC managers to evaluate when making the decision whether to export their towels to Earth Waves?

A) What are the risks involved in exporting OTC towels to Earth Waves? B) How intense is the organic food and clothing industry in Canada?

C) Do Canadian towel companies have success when they export?

D) Will OTC save money on domestic marketing by exporting?

2) Which of the following most likely supports OTC exporting their towels to Earth Waves?

A) Domestic sales of OTC towels have dwindled, and a new market is needed.

B) The founder of OTC has numerous contacts in Canada.

C) Earth Waves is located in an excellent location on central Toronto.

D) OTC is an SME that can readily adapt to the demands of the Canadian market.

3) Which of the following most strongly suggests OTC should not export its towels to Earth Waves?

A) OTC managers are risk-takers with the determination to expand OTC.

B) Earth Waves has offered to guide OTC through Canadian regulations.

C) Earth Waves has a large client base and publishes a semi-annual catalog.

D) OTC's towel manufacturing at the Liverpool facility is nearing maximum capacity.

4) Which of the following should be considered in making decision to export OTC towels to Canada?

A) What is the likelihood of Earth Waves opening a subsidiary in Canada?

B) What is the probability of OTC and Earth Waves entering into a joint venture?

C) How much fluctuation occurs in the exchange rate between the Canadian dollar & the British pound

D) What documentation would be required for OTC to export towels to Asia?