Case study

Question

The book store is a business which sells a variety of books to suit any lifestyle, from bestselling novels, educational material to children’s books.

The owner, Wendy Brooks, has realised that there is a demand for creative stationery based on her customers’ requests. She decided to expand her business by producing a stationary line including creative paper, envelopes, notepads, creative stamps, craft pens and wrapping paper which she will sell in store.

Wendy is considering using semi-finished products to produce the stationery and wants to import the creative stamps and craft pens in china. Wendy plans to apply for a business loan in order to gain the capital for the expansion of the book store. Wendy knows that she has to conduct thorough research before starting this new venture.

You are required to assist Wendy by conducting the research and preparing a typed investigative report on the following points:

e) Assuming the inflation rate rises, give one implication that this increased inflation rate would have on the import cost of creative stamps and craft pens from China.

Answer 1

e) Assuming the inflation rate rises, one implication that this increased inflation rate would have on the import cost of creative stamps and craft pens from China is that it may lead to an increase in the cost of these products. This is because a higher inflation rate can lead to a depreciation in the value of the local currency, making imports more expensive. Additionally, higher inflation can also lead to increased production and transportation costs, which may further contribute to the rise in import costs. Wendy will need to take these potential cost increases into consideration when planning her budget for importing the creative stamps and craft pens from China.