International business is the core theme in performing business in current age of globalization. Within the competitive environment, companies are competing at global level. In international business a firm can employed in either of both ways such as transfer or export. Import and export are the two basic and principal ways of doing the business (Dunning, 2007). Whenever a company engages into the international business, there are lot many factors which impact the business enterprise. Hence there are advantages and disadvantages of both import and export. Considering this view, this task report addresses the critical examination of two principal ways of happening international business and individual advantages and disadvantages. Furthermore the assignment survey also talks about the international and free trade (Fortanier, 2008).
Ways of Occurring International Business:
Researcher identifies that we now have two primary ways of conducting international business: import and export. In transfer a company or individual purchase the goods beyond your country of origin and sold-out in local country. On the other hand every time a company or person produces the product/goods in the country of origin or domestic country and sold-out in overseas company (Gupta and Govindarajan, 2008). In both ways there are several factors which have greater impact and affect on international business practice. In addition there are several benefits and drawbacks of import and export. The term export refers to the shipping and delivery of goods and services beyond your port of the country (Hennart, 2004). Whenever a seller markets such goods, it is recognized as exporter and every time a person purchase the goods or services outside the country then it is recognized as importer. In the international business, the word export means advertising the goods and services beyond your home country and vice a versa. Except some goods or services, any products and goods can be exported to other country. The distribution of exported goods is undertaken by the domestic trader where the goods are exported (Hennart, 2006). It is required to hold the engagement of custom regulators while exporting the commercial levels of goods in both country of import and country of export. Because of the low value trades, the tiny trade over the internet such e-bay and Amazon is usually by-pass through custom. Which means export is at the mercy of legal and formal limitation by the united states of export to guard the interest of domestic providers (Johanson and Wiedersheim-Paul, 2008).
The counterpart of export is recognized as import. The exchange of goods and services from resident to non resident is also known as national bank account export. National accountant so sometimes need to make some modifications of basic trade data and hence the basic trade data requires the statistical research. it differs from the coverage of national accounts as the data for international trade is usually from the custom service in the respected country. In case any country contains general trade then your goods exported or imported in the country are registered on respective dates. On the other hand in case a business uses special trade system in which the goods are received in warehouses then the goods are not recorded as external trade till the time goods are sent to the free trade area (Jones, 2006). In free trade area developed with in the country, some of the products move freely without the custom, control or statistics in the trade of goods. This is also true in case of goods are transferred between your member states. Finance institutions are responsible for the statistical saving for the trade in services and these data details are then reported to the central bank. It isn't only applicable for only export but also for the import. Inside the globalization, the services are provided outside the country electronically such as via internet, it is therefore difficult to measure the amount earned is such circumstances (Nelson and Winter, 2007). Some basic information or statistics in international trade is normally avoided such as smuggled goods or international move of illegitimate services. In the state trade such of kind of goods and services is not accounted.
Commercial insurance policy and international trade is one of the oldest & most famous branches of international business and considered economics. Export and transfer are the major the different parts of the international business. Economists are generally discusses the macro economical risks and benefits of export and transfer. In presenting the several perspectives, there the two different views such as identifying the advantages of international trade and concerning the possibly that the local sectors may be affected through international trade (Jones, 2008). For instance if an importer imports the digital goods from china then it is three to four 4 times cheaper than the domestic producers' products. Then your market for the local players can be captured by the importer's products and the local labor are certain to get crushed by the international player. To be able to safeguard the eye of domestic market, the federal government has imposed some procedures and duties on brought in goods (Easterly, 2008).
The export methods include the good or product which has been hand delivered, delivered via interface or mailed through internet. The similar process is followed in importing the products.
Some of the natural rules on import and export of goods are export supervision rules, bureau of industry and security, international tariffs, BIS regulation. In addition to this there are some goods which need international certificate for import and export. These goods includes, liquor, platinum, tobacco, drugs etc. These restrictions differ country to country. The exported or imported item comes under the specific product category and respectively the business can buy the license. There are a few restricted places which constrained for both import and export such as Cuba, Sudan, North Korea, Pakistan, Syria and Iran since these countries promote the terrorist activity (Hennart, 2007).
Government laws, legislation, policy and practices are generally known as trade obstacles which are developed for guard the local products, labor and market from the foreign players or particular domestic products from the stimulating of man-made export. in order to restrict the business enterprise practices, there have been s similar result which is not generally thought to be trade barrier. The federal government policies are imposed to safeguard the international exchange of goods and services generally common foreign trade barriers (Casson, 2008).
There are certain kind of goods, services and information which is limited in the international trade for example goods that happen to be associated with the weapons brought on of mass destruction, biceps and triceps, ammunition, advanced telecommunication, archaeological artifacts and those items which aren't and only the country. Some of the major exemplory case of these goods includes the nuclear suppliers group, missile technology and technological development (Dunning, 2006).
A trade tariff is the duty also called economic barrier which is enforced by the local government on the things imported in the country. Whenever in the country the foreign competition' goods demand is rising and dropped the demand of local players then this tactic is used to guard the interest of local player. Hence, it is the proper reason to retain the domestic providers and increase their ability by giving them with subsidies and other support (Bartlett and Ghoshal, 2007).
Advantages and Drawbacks of International Trade:
There are some benefits and drawbacks of international trade for both the export and transfer.
Advantages of Exporting:
One of the major benefits of export is the possession edge which is specific to the organizations' international experience, asset and capacity of the exporter to either develop the differentiated product or low priced product with in the principles string (Hertner and Jones, 2007). A blend of investment risk and market potential is k received as the location benefit of this market combination. In order to retain the key competencies within the organization and stitching it throughout the united states without keeping the license, retailing or outsourcing is the international benefit in export (Amatori and Jones, 2003).
Some of the organizations having lower level of ownership advantage may do not enter into the foreign marketplaces. In the event a company's products and company's possession prepared with the international benefit and ownership benefit, the entry can be produced through low risk model known as exporting under the eclectic paradigm. There is low investment requires in exporting of goods than the other modes of international trade and growth such foreign immediate investment. Some how it is identified that the lower level of risk result in, lower degree of rate of go back than possibly the other settings of international trade (Khanna, 2007). On the other hand the usual come back on international trade in export sales might not have greater probable but also there will be no risk. In export of goods the professionals are allowed to exercise the various operational control nonetheless it does not have the option within the control of marketing activities of the business. The finish consumer of exported goods is a long way away from the exporter although various intermediaries can mange the chance (Jones, 2008).
Disadvantages of Exporting:
The exporting of goods is specifically difficult and disadvantageous for the tiny and medium size companies having employees significantly less than 250. The sale of services and goods in to the foreign market is problematic for them rather portion the domestic market. A lack of knowledge of different languages, difference in culture, exchange polices and trade restrictions getting the major effect on exporting the goods for SMEs. In addition to this the staff relationship and pressure of resources is a significant block of exporting the products. Despite this disadvantage, a few of the SMEs are still exporting however two third of these sold-out to the foreign marketplaces (Jones, 2008).
In addition to this there are a few major disadvantages highlighted in the export of goods such as financial management, communication technology advancements, and customer demand and management errors. In order to prevent transaction process of exporting the goods and exchange rate fluctuation, it is vital to have more capacity for handling the financials for coping up the attempts (Nelson and Winter, 2007). Customers is now able to connect to the suppliers due to the recent development is the communication technology has improved the way of purchasing goods, because the communication is mush cheaper then what is was 2 decades before. It leads more transparency in purchase and purchasing of goods and vendors are accountable for following the real-time demand for submitting the business deal details (Hennart, 2007). The clients are becoming progress because of the improvement in the technology and they demand more support and services from the vendor such as startup and equipment assembly and startup, delivery service and maintenance that happen to be difficult for the exporter to provide. There might be some pitfalls in the organization occurred by some of the management mistakes such as oversea a distributor, a realtor or chaos in the global business (Johanson and Wiedersheim-Paul, 2008).
Advantages of Importing:
Importing raw materials and goods is one of the pathways of increasing the income. There are volume of benefits in importing the goods, such as high quality, low prices, and benefits related to the international trade. An importer can possess the comparative advantage this means lower prices (Jones, 2006). Also the importer can have much cheaper products from the foreign market anticipated to low labor cost, low fees etc. in conditions of quality, the importer can have the bigger quality goods and produce the done goods with high quality and prolong the business profit margins. In a few countries, government provides the support to the importer for producing the trade relationships (Nelson and Winter, 2007).
Government provides the information of the manufactures and producers in the overseas country so that the importer can buy the high quality and low price goods. Also due to the government involvement reduces the exchange risk. An importer can usage of the regionally exclusive resources and cheap labor for producing the products. These resources will be required in the processing process that have specialised skills and can be sound in certain countries. For instance in digital items, japan people are highly efficient and manufacturer in UK use the labor from Japanese market for producing goods. The importing of resources includes everything starting from labor to technology (Fortanier, 2008).
Disadvantages of Importing:
There are many governments and economists who believe the importing goods have numerous drawbacks. For example importing of goods could lead the erosion of the home markets and national economies specifically when there may be trade deficit take place i. e. the transfer is higher than the export. Some of the goods like automobiles; appliances lead an increased level of home automobile and electronic markets and also lack of careers in the particular market segments (Hennart, 2007).
Some other problems can be increased credited to import of goods such as conflict in the local values because of the acceptance of cultural values. The domestic industries may also be crippled due to the import of the countries where in fact the wages are low and the local industries are unable to compete given that they cannot lower down their prices of goods than the cost of goods and also they have the obligation to the worker union (Hertner and Jones, 2007).
Free Trade Concept:
The concept of free trade was created in the machine to benefit the united states and improving the health of poor by giving them high quality and cheaper products. However as an economist, in my own thoughts and opinions free trade is erosion the home players for example if UK authorities lower the down the transfer duty on glucose then your demand for the brought in sugar increase and domestic player will not be able to compete with the international player (Johanson and Wiedersheim-Paul, 2008). Alternatively the monetary category argues that free trade promote environmentally friendly degradation, supporting the kid labor, income inequality and wage labor, slavery, harming the nationwide security, enforcement of cultural change and accentuating the poverty in the country.
The economists also argued that the importing goods under free trade are compared by the home industries due to go up in competition in conditions of product quality and cheaper prices (Nelson and Winter, 2007). A maximum exploitation of workers due to the free trade is also compared by the socialists. Free trade generally do not decrease the poverty or enhance the condition of working course in the country but frequently make them more poor. In addition, it supports the colonialism and imperialism in the country. On the other hand I think that in free trade consumer could gain more than the industrialists and the local producers will mobilize their products without lifting the tariffs (Jones, 2006).
Conclusion and Ideas:
The competitive business environment enforces the firms in both the international and home markets to keep their business and stay competitive. However depending on need and potential of the business enterprise, it is vital to understand if the company should engage in to the export or import activity (Gupta and Govindarajan, 2008). It is strongly recommended to the firms specially the medium and small companies to increase their business potential at local market first and then extend into the international market cooperation, joint venture or business relationship. Prosperity in the country cannot be achieved through protectionism since it increases only the poverty and also do not protect the local industries or careers but damage the export business and industries which has belief on imports (Hennart, 2007).
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