question_answer

  Consider the information given below (i) What are the ways in which Ravi's small production unit was affected by rising competition? (b) Should producers such as Ravi stop production  because  their  cost  of production is higher  compared to producers in other countries? What do you think?       

Answer:

                  (a) Ravi's small production unit was affected by rising competition in the following ways (i) His customers have changed their product, as they are now manufacturing TV sets for the MNC brands, who do not use the capacitors produced by Ravi's unit. (ii) His production and sales have also reduced due to his capacitors being cosdier than the imported variety, due to the removal of import duties on imported capacitors. (iii) He is going into loss due to not recovering his costs with such a small amount of production. He may even have to close down his unit like his friends have done. (b) Ravi should either improve the technology of his manufacturing process to compete with the imported products or try to manufacture any other product which does not have so much competition from imported products. In both cases he will need to make some capital investment, for which he must approach the concerned government agencies or the banks for necessary loans.