International marketing Nandeesh.L.

1. Under what circumstances does marginal costing for export constitute dumping?

Dumping refers to the practice of selling products at a price lower than the current domestic
value in the country of origin. Dumping results due to many factors which are un-favourable in
the domestic market they are as discussed below.

Taxes: Products or services are sold outside the country when taxes are imposed on domestic
products by the local government and that do not arises when sold overseas.

Local Policies: When local policies and regimes are very strict and when they affect the sales
volume in the domestic market they are sold in overseas market at a rate lower than domestic
market price.

Saturated Market: When domestic market for a product or a service is saturated companies try
to expand overseas which may result in dumping.

Competitive Domestic market: Dumping results in situations when domestic market is very
competitive due to many existing players which gives less scope for increase in sales volume.

Dumping can also be due to others reasons like new market venture, inventory issues and
unintentional reasons.

Predatory dumping: This occurs when a firm intentionally sells at a loss in other country in
order to increase its market share; this is achieved at the expense of the domestic producers.

Sporadic dumping: This occurs when a firm has to solve excess inventory problems in the
home market by selling at any price it can get in an overseas market. This avoids a competitive
war in the domestic market.

Unintentional dumping: This occurs when there is time lag between the dates of the transaction
and the date of arrival of the goods in the overseas market. Dumping in this case is usually
because there has been a movement in the exchange rates in the intervening period, making the
landed price to the overseas customer less that the cost of production in domestic market.