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.
Which of the following should be considered first in making the decision to export OTC towels to Canada?
◦ What is the probability of OTC and Earth Waves entering into a joint venture?
◦ How much fluctuation occurs in the exchange rate between the Canadian dollar and the British pound?
◦ What is the likelihood of Earth Waves opening a subsidiary in Canada?
◦ What documentation would be required for OTC to export towels to Asia?
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