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    Global Marketing case study solution

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    Case: If there are only two countries in the world-Country A and Country B. And Country A is Developed country while as Country B is under-Developed Country.
    Country A is exporting to Country B and it also stops importing from country B.

    Q-1: What are the other possible outcomes that can happen in this situation?
    Q-2: How will country A improve the situation?
    Q.3: How will the country B improve its condition in the parallel world?

    Also, Country B is paying to Country A in "Gold and Silver".
  • Answers

    2 Answers found.
  • We had a similar question in the past. You have country A, developed and only exporting, you have country B, under developed and only importing.

    1.Your first question should be considered based on the time frame also.
    In the Short term
    Country A will prosper more as it has only exports, no imports, it is earning in gold and silver. COuntry A finanical reserves including gold reserves improve.The GDP and the quality of living of the people will certainly improve. The various industries and services that support the export goods production directly and indirectly will kickstart and develop rapidly.
    Literally the opposite happens in Country B, it is under developed, only importing and paying in gold and silver. It's monetary value will fall, the purchasing power of its currency will fall, cost of living and cost of the goods will be higher due to taxes and other related expenses. It would be hard to improve the quality of life effiecintly as it has to spend more and more of the gold and silver reserves.
    In the long term
    Country A will reach a point of stagnation or plateau, it's natural rescources will reach a point of being exhausted. The exports will slowly decrease because of satruation or decreased afforability of Country B. Country A growth rate will be flat or even start dropping. People will find it difficult to earn and maintain their lifestyles as before.
    Country B will bottom out as it cannot afford the imports as before, it has less of reserves and the demand for the imported goods will reduce and people would be forced to find other means to generate their goods at a cheaper price. Once the demand comes down, COuntry A would be forced to reduce the price of the goods so that it would be easier for Country B to import.

    2. Country A to improve it's situation.
    The only country it can export is to Country B. So, country A has to plan a gradual development of exports will early cap or limitation, so that it doesn't burn out the market soon. It has to start rationing its resources so that they can last for long. It has to start accepting currency for its exports and it would help to keep the flow of exports steady. It has to be innovative and start changing or improving the range of products periodically so that Country B keeps buying goods. It has to change it's policy and start importing goods from Country B so that it's existing industries and the export market remains viable. In simple terms, Country B is like a golden egg laying goose to Country A, it should allow country B to survive so that it keeps laying an egg every day rather than be greedy and kill off the goose.

    3.How will the country B improve its condition in the parallel world?
    Initially Country B will have to rely on imports but it should also start to learn to be more self reliant. It has to start producing goods internally and slowly plan to reduce the exports. Simultaneously, it had to drive a hard bargain with Country A for reducing the price of the exports and changing the terms of its payment plan to include currency. It should also study the demands and needs of the people of Country A, it should study its detail about the scarce commodities in Country A and start negotiating for exports to Country A. In short, Country B should assess it's own strengths and the weakness of Country A and start having exports so that both countries can survive.

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    Hey, thats actually interesting study questions over here. When i was studying, i had to do marketing reports , when our teacher gave us such kind of tasks. Good to feel myself in college once again.

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