Discuss the advantages and drawbacks of countertrade

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6. Discuss the advantages and drawbacks of countertrade.
intense but currency-based exchange is not possible. Also, countries may wish to trade in spite of the degree of competition, but currency again is a problem. Countertrade can also be used to stimulate home industries or where raw materials are in short supply. It can, also, give a basis for reciprocal trade. Chapter 15 1. The international marketer and the distributor will have different expectations concerning the relationship. Why should these expectations be spelled out and clarified in the contract?
2. Channels of distribution tend to vary according to the level of economic development of a market. The more developed the economy, the shorter the channels tend to be. Why?
Channels of communication: in a less developed economy, the communication process between geographically distant parties may not be smooth or timely. This may be due to lack of proper telecom connectivity or poor postal service. As a result, more channel members that are located within short distances may be required for an effective communication process. Moreover, the use of Web or e-commerce for communication and interaction is at an advanced stage in developed economies while it is as a nascent stage in the developing countries. Hence, marketers are unable to utilise this medium of communication in less developed economies. Resources: in well-developed capital markets, channel members are able to secure more financial resources and well-developed economies also provide more opportunities for expansion. Developed economies also witness the emergence of a few dominant players that will command direct channels of distribution and communication. Lower costs: by using more channels members, the distributors use a lot of abundant resources, while saving scarce resources. In addition, it has been found that less developed economies are reluctant to adapt innovative channel structures.

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