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Export Benefits of an Egyptian Firm

In this paper, we are asked to consider the benefits to an Egyptian firm of a decision to sell internationally. We first should consider the benefits of exporting. The economic concept linked to the importance of exporting in the concept of comparative advantage. Another benefit of exporting is the fact that the Egyptian domestic economy is only a fraction of the size of the global economy. If an Egyptian company were to export its products, the potential market for those goods is vastly larger selling internationally. In addition, if the firm in question has excess production capacity or excess inventory, then selling internationally is a way to generate incremental sales and profits. To the extent that the product the firm is considering exporting is in the maturity phase or is in the decline phase of the product life cycle, then the opportunity to export this product could start the entire product life cycle over again. Therefore, the benefits of exporting for an Egyptian firm include:

The opportunity to generate additional sales and profits

The opportunity to continue in full production until the productive assets of the firm are fully depreciated and depleted

The ability to receive payment in foreign currency

The ability to improve Egypt's balance of trade deficit and

The opportunity to employ more people

One of the competitive opportunities that Egypt has relates to the fact that the overwhelming majority of non-agricultural enterprises in Egypt have fewer than fifty employees. In economic terms, there are both positive and negative implications of being a small firm. Small firms have a competitive problem; to the extent that a small firm in Egypt is competing with a larger firm in Egypt or elsewhere in the world for the same customer, the larger firm would be expected to have an advantage. That advantage takes the form of economies of scale. The idea of an economy of scale advantage is that larger compa...

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Export Benefits of an Egyptian Firm. (1969, December 31). In LotsofEssays.com. Retrieved 10:45, March 29, 2024, from https://www.lotsofessays.com/viewpaper/1693946.html