Team 2:Aornaba Chaudary

Aditya Mahajan

Ilkin Ilyaszade

International Trading Environment

BASM 530

February 3rd, 2010

Project 2

Agenda

Introduction of the Idea Demand in Destination Market Competitive Advantage of Exporting Country Comparative Advantage Financial Costs Trade Costs

The idea: Importing Specialized Sports Apparel

Imports & Expenditures on Clothing

85

90

95

100

105

110

115

2003 2004 2005 2006 2007 2008 200926000

27000

28000

29000

30000

31000

2003 2004 2005 2006 2007 2008 2009

Imports from Sri Lanka Expenditures on Clothing in Canada

Competitive Advantages

Cheap Labour Costs– Average Hourly Labour Cost (Wages and social charges - in

US $)

Country 1992 1998 2000

Canada 10.5 13.93 14.29

USA 10 12.97 14.24

Mexico 1.7 2.23 2.2

Sri Lanka   0.49 0.46

Korea 3.8 3.63 5.32

Competitive Advantages

Literate labor force

Major Challenge

High Lead Times

- Inefficient Fabric Base

Financial Analysis

Costs calculated for 500 Kimonos

Manufacturing Costs 5,000 US $

Freight Charges 1,987.5 US $

Import Duties 900 US $

Total Cost 6,097.5 US $

Financial Analysis

Costs Calculated for 1 Kimono

Total Cost per unit 12.195 US $

Selling price per unit 50.00 US $

Profit per Kimono 37.805 US

Trade Costs

Political Separation– Exchange Rate Trend

Physical Separation– Shipping costs– Customs Tariffs While Importing– Export Duties

Relational Separation– Himashanta—Our Local Contact

Exchange Rate Trend

1/Jan/2000 - 31/Dec/2009

© 2010 by Prof. Werner Antweiler, University of British Columbia, Vancouver BC, Canada.

Conclusion