Pros and Cons of Exporting to a Regionally Integrated Market Essay Example

second biggest member in EU in terms of honey consumptions. It will certainly account for a major proportion of our production outsource. This will largely increase our sales revenue as well as the economy of scale to expand the company.

Moreover, when penetrating regional integrated market like France, it’s likely our company will be subsidized by government which is critical in logistic and country risk cost cutting. However, prior to entering, EU firstly has laid down extensive and lengthy legislation applying to the EU import of honey intended for human consumption “Before an EU buyer places an order, he needs to be sure your honey complies with the EU requirements and his own quality demands.

EU buyers will therefore require documentation on chemical analyses of each batch of honey. Most EU honey importers make use of the internationally acknowledged chemical laboratory on honey, Applica, to perform analyses” (CBI, March, 2008) Along with the import license acquisition, it requires extremely long due-process and in turn increasing our inventory storage cost. Secondly, with regional free trade, production shifts toward the most efficient manufacturers of honey within the RTA.

The fact that they retaining barriers to trade with nonmembers deprives our cost leadership and consumers will never consider our honey when there are cheaper options elsewhere. Lastly, highly integrated RTA in EU also reflects a strong economic union that readily affects France, which makes France’s economic and cultural prospects very volatile to predict and understand since the internal members are very inter-related particularly when there’s an economic recession, for instance the recent contagion of Greek debt crisis towards EU.