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Cost Accounting: What is Dumping? 0 Views


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Description:

What is Dumping? Dumping is a way to increase profits for companies that trade internationally. Dumping describes when a company exports some product to a country and charges less than what the product typically costs in that country or in the company’s home country. The goal is to gain market share in that country by offering the lower price.

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Transcript

00:00

And finance Allah Shmoop What is dumping up Oh well

00:08

yeah I guess it's like that And you might recognize

00:11

this excellent scene directed by Bob Zemeckis It won the

00:14

porcelain pony on Yeah if you never saw it or

00:17

need a refresher What is predatory pricing Well basically it's

00:22

the act of selling of a product at a price

00:23

below production cost with the intent to bankrupt competitors so

00:28

that when they're gone while the Predator can swoop in

00:31

and charge whatever pricing they want while similar to predatory

00:35

pricing dumping is the export of product from one country

00:39

to another at a price below the price at which

00:42

it sells that product domestically Alright extreme Somalia finally gets

00:49

its act together as a country and instead of spending

00:52

efforts on pirating and assisted genocide they decide to make

00:55

cars and waited diversify their guys They're funded by pirates

00:59

Are us the most profitable bank on earth and they

01:03

make trucks You know the kind You always see terrorists

01:06

CNN shots of you know huge dance bumps and scratches

01:09

but the trucks keep running just fine like even on

01:12

three wheels So Somalia makes trucks just like this and

01:15

dumps them in the U S for ten grand each

01:18

Well after five years of this dump for GM and

01:20

Toyota the Big Three truck makers are all dead Nobody

01:24

wants to pay three times what the terrorist warlord model

01:28

costs in order to buy a truck that's American made

01:31

when those Big Three or gone Somalia then raises prices

01:35

above where they were AII instead of their truck selling

01:38

for ten grand they now sell him for forty grand

01:41

reaping huge rewards So you'd ask yourself Is this bad

01:45

Is this illegal Is this even sustainable Like what if

01:50

they do dump for five years and lose billions Won't

01:54

new competition come in and destroy the company Consumers will

01:58

then have benefited from the low five year dumping prices

02:01

So it's free trade Why not let it be free

02:04

Well good questions to noodle on you know while you're 00:02:07.35 --> [endTime] dumping

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