High Total Cost of Ownership Based on International Trade - Case Study Example

High TCO Based on International Trade al Affiliate] High Total Cost of Ownership Based on International Trade International trade is a very complex nature of commerce that influences the cost of living to a very large extent. Many traders and consumers go about life on high standards of living without realizing the primary causation (Henderson & Hooper, 2006). Some become accustomed to the standards set by the international commerce that they obliviously fail to realize its impact on their lives.

International trade is not only characterized by the obvious selling, buying and shipment, but also entails factors of intervention by respective governments seeking to protect their domestic manufacturers and economy at large (Grimwade, 2000). Such governments use tools like taxation, subsidies, custom duties, sanctions and other trade restriction strategies like strict documentation to affect foreign trade that in a way affects their citizens as well. Toyota Cars High Total Cost of Ownership in the US Toyota Company is the No 1 automobile company in the world.

The Japanese company trades its product across the globe with incredible competitive advantage. The company has segregated its market in a manner that its products sell at higher prices in developed countries as compared to the prices set for its products in the developing countries. In a bid to promote sales and attain greater profit margins by marginal advantage, the Japanese government has subsidized the Toyota products; which makes it cheaper for foreign consumers – no wonder the company’s market superiority (Encarnation, 1994).

In the US however, the Federal Government has laid down countermeasures to ensure that her manufacturers are protected from this force (Encarnation, 1994). The Federal Government issues Anti-Dumping (AD) duties; against cheap products dumped into the US market and Countervailing (CV) duties; against foreign subsidies, to regulate Toyota motors’ trade traffic into her market. Consequently, the Total Cost of Ownership (TCO) of the products has become high in the US market, protecting the US automobile manufacturers from excessive competition and price wars derived from Toyota Motors foreign trade strategies (Sato & Nelson, 2006).

References Encarnation, D. J. (1994). Rivals beyond trade: America versus Japan in global competition. Ithaca, N.Y: Cornell University Press. Grimwade, N. (2000). International trade new patterns of trade, production & investment (2nd ed.). London: Routledge. Henderson, D. R., & Hooper, C. L. (2006). Making great decisions in business and life. Chicago Park, Calif: Chicago Park Press. Sato, R., & Nelson, J. (2006). Beyond trade friction: Japan-U.S. economic relations. Cambridge: Cambridge University Press.