Your firm, Tempe Machines, Inc., manufactures consumer and industrial sewing machinery. The consumer machines sell for $430 to $1,600 and are sold in the United States through department stores, discount stores, and home sewing stores. The industrial machines range in price from $15,000 to $165,000. The machines contain a unique computer chip that allows them to embroider words and designs on fabric in a choice of 60 scripts. The firm owns the patent on the machines in the United States. Currently, the industrial machines are made in the U.S. from components made in the U.S. and Korea. The consumer machines are assembled at plants in North Carolina and in the Caribbean from parts made in Korea. The computer chip is manufactured for Tempe Machines by a Washington firm.

Currently Tempe exports about ten percent of its production of industrial machines. Of the total exported, the most sophisticated machines went to Spanish and French textile firms. A few earlier generation models were shipped to India, Bangladesh and Vietnam, although market prospects there look excellent.

The president of Tempe Machines has inquired about your opinion on whether the company should consider increasing sales to foreign markets. She has asked you to prepare memo on the subject, and requests that you address some of the following issues.

If Tempe were to consider increasing its export base what problems might it encounter? What are the advantages and disadvantages in exporting products to Europe, India, Bangladesh, and Vietnam? Should it consider direct or indirect exporting?