XYZ firm, the leading producer of leather goods in its country is planning to expand its business. Industry experts identify Asia as a potential target market. They report that substitute products, particularly in India, are highly-priced. Darren, the operational head, feels that exporting their product to India is a good idea. According to him, their price advantage alone will ensure good sales. However, his colleague, Mark, who is also the head of product development, feels that Darren is too optimistic and that this venture may not turn out to be as profitable as Darren expects it to be. Darren's view is based on which of the following assumptions?
a. Imports in India usually exceed exports from the country.
b. XYZ's product is a close substitute for locally available goods.
c. Consumers in India are extremely loyal to national brands.
d. India has high import tariffs.
e. The quality of the domestically produced substitutes is not as good as XYZ's product.

Mark feels that Darren is too optimistic and that this venture may not turn out to be as profitable as Darren expects it to be. Darren's view is based on the assumption that India has high import tariffs.

Explanation:

When companies import or export products in or out of the country, they are usually charged with a duty which they have to pay on the import or export of the products. This is called as the Tariff.

While considering the export of a product to another country, the import tariffs of that other country has a pretty much impact on the profits of that company's Sales. Higher the tariffs, lower the profits and vice versa.

So when Mark wanted to export his product to India, Darren was with the view that India has high import tariffs which will restrict them to have huge profits of exporting their product.

Learn more about import export tariffs at:

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