Class Quiz 4

Question - The importer tells the exporter to ship the goods in a ship or a vessel not older than 15 years. Draw an inference.

Answer – Older the vessel, the insurance premium will go up. Hence, CIF price goes up [CIF (P) = G FOB (P) + Insurance Premium + Freight]

Question - Why Mahindra and Mahindra (making SUV – Sports utility vehicles) target smaller markets like Ukraine / Kazakistan / Uzbekistan?

Answer – Environmental norms (emission norms) are not present, else car prices will go up dramatically (unlike in Europe, which has Euro-4 or Euro-5 norms). Also, source the components locally (80%-90% of car is bought out items – buy and assemble)

Rather than trying to reduce the price of the finished product, reduce the price of components.