Question

International business

Q-2. Evaluate the business mode of operands in the common market over the custom union. How operating in the economic Integration can benefits the managers over the operation in the custom union market?

Answer 1

Under custom union market, the participating economies not only allow for free trade of goods and services and free flow of capital and labor but also follow common external tariff. In other words, the countries of the block have same trade policies with non participating countries.

Economic integration, such as under custom union markets, bring numerous operational ease and leverages to businesses for firms operating in the market. Some of them are -

1) Because free flow among the member countries, the managers can easily import skill and cheap labors from another member country at it's leverage, or may have supply of raw materials and resources from different member countries without any charge of custom duties. Hence the source from which the inputs and resources can be extracted without incurring more costs gets expanded.

2) Not only the inputs get brought free of custom duties, but the final goods are also exported without custom duties and hence expanding the market as well.

3) Once an input gets into border of the union, one time custom duty is charged and then the good is ready to move freely across the member countries. This also helps firms to get inputs from outside countries at low custom charge.