Problem:
NTG's business, a toy-exporting company, continues to grow. Its primary products are the wooden children's toys it produces and exports to a distributor in Brazil. However, its recent joint venture with a Brazilian firm has also been successful. Under this arrangement, a Brazilian firm produces other toys for NTG; these toys are then delivered to that distributor. NTG intentionally started its international business by exporting because it was easier and cheaper to export than to establish a place of business in Brazil. However, it is considering establishing a firm in Brazil to produce the wooden children's toys there instead of in the United States. This firm would also produce the other toys that it now sells, so it would no longer have to rely on another Brazilian firm (through the joint venture) to produce those toys.
1. Given the information provided here, what are the advantages to NTG of establishing the firm in Brazil?
2. Given the information provided here, what are the disadvantages to NTG of establishing the firm in Brazil?