XYZ firm, the leading producer of leather goods in its country is planning to ex

Question

XYZ firm, the leading producer of leather goods in its country is planning to expand its business. Industry experts identify Asia as a potential target market. They report that substitute products, particularly in India, are highly priced. Darren, the operational head, feels that exporting their product to India is a good idea. According to him their price advantage alone will ensure good sales. However, his colleague, Mark, who is also the head of product development, feels that Darren is too optimistic, and that this venture may not turn out to be as profitable as Darren expects it to be Darren's view is based on which of the following assumptions? O A. XYZ's product is a close substitute for the locally available goods. B. India has high import tariffs. ° C. The quality of the domestically produced substitutes is not as good as XYZ's product. O D. Imports in India usually exceed exports from the country. E. Consumers in India are extremely loyal to national brands

Explanation / Answer

Ans: XYZ's product is a close substitute for the locally available goods

Explanation:

Darren assumes XYZ's product is a close substitute of the products in India which is high priced. If XYZ would export it's product to India at a comparatively less price than the substitutes available in India, it can earn a good amount of profit. Thus, the option [A] is correct answer.

But Mark's view is based on the assumption, i.e., India has high import tariffs.

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