SunTrail Sportswear buys fabric in India and sells finished clothing in South Africa and Brazil. IndiaSunTrailSouth AfricaBrazil© EAGLE BEACON GLOBAL (a) De...
Question 1 Report
SunTrail Sportswear buys fabric in India and sells finished clothing in South Africa and Brazil.
(a) Describe what is meant by foreign currency. [2]
(b) Describe what is meant by an exchange rate. [2]
(c) Explain why SunTrail needs foreign currency when buying fabric. [2]
(d) Explain why cultural differences may affect clothing sold internationally. [2]
(e) Outline three ways an international business can communicate with overseas customers. [3]
(f) Explain three effects of language differences on international trade. [3]
(g) Account for why SunTrail may sell in more than one overseas market. [3]
(h) Explain three ways a trade agreement can help businesses trading between member countries. [3]
Answer Details
(a) Foreign currency is money used in another country, such as Indian rupees or Brazilian real. It is different from the business's domestic currency. [2]
(b) An exchange rate is the price of one currency in terms of another. It shows how much foreign currency can be bought with domestic currency. [2]
(c) SunTrail needs foreign currency because its Indian supplier may require payment in rupees. It must exchange its domestic currency to make that payment. [2]
(d) Customers in different countries may prefer different colours, styles and sizes. Clothing should suit local customs and tastes if it is to appeal to buyers. [2]
(e) International businesses can communicate through a translated website, email, social-media messages, or local agents. Any three. [3]
(f) Language differences can cause product instructions to be misunderstood, mean contracts need translation, and cause advertisements to communicate the wrong meaning. [3]
(g) Selling in more than one overseas market gives access to more potential customers. Weak sales in one country may be offset by sales elsewhere, spreading risk. [3]
(h) A trade agreement may reduce or remove tariffs, provide common rules that simplify procedures, and make member-country markets easier to access. [3]
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