What Is Meant by the Cannibalization of an Export Market

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The Answer is When you choose to change how you service a market to which you are exporting,either because you are building a new plant in the foreign country or you are expanding production in an existing plant,you would like to know the incremental profitability of this new project.Cannibalization of exports refers to the lost exports in this market that you are now serving differently if no market can be found for the goods that were formerly being exported to that country.These lost exports could be from the parent or from another one of its foreign subsidiaries in a different country.The lost profits on these exports must be considered to be a cost of accepting the new project.If the exports that were formerly being sent to the country can be sold elsewhere in the world,there is no cannibalization.

What Is Meant by the Cannibalization of an Export Market

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