Apparel Company RED Lion Ltd

question 91

Multiple Choice

Apparel company RED Lion Ltd. has a strong presence along the West Coast in the U.S., and is looking to expand its market overseas. The company began through the export route, exporting apparel to firms in the U.K., but now wants to establish manufacturing units abroad. Which of the following would weaken the company's decision to expand abroad?

• A) Establishing manufacturing abroad would reduce RED Lion's shipping costs.
• B) There is increasing economic uncertainty in the U.S. market.
• C) The preferences of customers in both countries are similar.
• D) The economic systems in the two countries are very different.
• E) A competitor in the U.S. market recently went out of business.

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Definitions:

Operating Income

Income generated from a company's primary business activities, excluding deductions for interest and taxes.

Cash Sales

Revenue generated from transactions where payment is made in cash immediately upon purchase.

Supplies Expense

Supplies Expense represents the cost consumed in the use of supplies, such as office supplies, during a reporting period.

Rent Expense

the cost incurred by a company to utilize property or equipment for business operations, typically recognized over the lease term.