Kleenex, a household name for facial tissues, is saying goodbye to Canada due to “unique complexities,” as stated by Kimberly-Clark, the parent company of Kleenex. This decision highlights the importance of understanding market dynamics and the overall business environment in a foreign country.
David Soberman, a marketing professor at the University of Toronto, noted that the decision was almost certainly financial, as companies do not exit markets where they are making money. A significant challenge for Kleenex was the popularity of Scotties, a facial tissue produced by Canadian company Kruger.
Additionally, economists noted that Canada’s market is not very friendly to foreign businesses, citing inefficient government bureaucracy, high taxes, and protectionism as some of the reasons. This situation underscores the concept of opportunity cost, as Kimberly-Clark likely decided that the resources spent on overcoming challenges in Canada could be better utilized elsewhere for a higher return.
It also illustrates the impact of protectionism on foreign businesses, as Canada’s protectionist policies in some of its biggest industries may have contributed to making the market less attractive for foreign companies like Kimberly-Clark.
THINK LIKE AN ECONOMIST!
Q1. Define the term protectionism.
Q2. Explain one reason why domestic governments may have protectionist policies.
Q3. With the use of an appropriate diagram, analyse the impact of high taxes on the supply of tissues.
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