Exporting Case Study - Wadia

Case Study: Exporting & Growth for Small Businesses

1. For companies such as Morgan and Wadia exporting is beneficial because they are able to sell their products at profitable prices to international markets. In the case of Morgan Motors, their cars are significantly expensive therefore making it difficult to establish a profitable niche in the home country, United Kingdom. 70% of Morgan Motors’ sales comes from the US and other parts of Europe helping the company to increase its profits as well as its market size. For Wadia they would be unable to create a large market within the United States for its products, by exporting 70 to 80 percent of its output they are taking advantage of developing a larger market abroad. By serving larger markets through exporting, companies are able to take advantage of economies of scale, and decrease their average costs, therefore increasing profits.

2. By neither exporting nor importing, Morgan Motors would be unable to establish a profitable market by solely operating in the United Kingdom. Since 70% of sales come from foreign markets, profits would decrease drastically causing them to run out of business and they would have to dissolve the company. If Morgan Motors chooses not to import they would not be able to manufacture their cars since most of their raw materials are imported from foreign firms. Consequently if the company didn’t import or export they would have no business, and would have a miserable outlook on operating its company.

3. Morgan and Wadia may have a lack of market information for their foreign markets, unless they employ a special department to conduct research about their foreign markets, which can be expensive they may be unable to obtain information on the accurate statistics of their international performance. Additionally, these companies face the need to maximize their capacity utilization and may face difficulties in obtaining guaranteed working capital loans for international...