It is a good bet to claim that you have a decent idea of what Import and Export are about. Importing and Exporting supports the development of national economies and extends the global market. But are you aware of its advantages and disadvantages? Let’s have a look at them.
Importing and Exporting
Importing and Exporting are means of Foreign Trade. Foreign trade is carried out in goods and services – which includes imports, exports, and the balance of foreign trade – is presented separately for goods and for services. The total imports, exports, and balance of foreign trade are presented as summaries of goods and services.
Exporting refers to the selling of goods and services from the home country to a foreign nation. Whereas, importing refers to the purchase of foreign products and bringing them into one’s home country. Further, it is divided in two ways, which are,
Every nation is blessed with certain resources, assets, and abilities. For instance, a few nations are rich in natural reserves, for example, petroleum products, timber, fertile soil or valuable metals and minerals, while different nations have deficiencies of these resources.
Browse more Topics under International Business
- Introduction to International Business and its Benefits
- Contract Manufacturing, Licensing and Franchising
- India’s Involvement in World Business
- Joint Ventures and Wholly Owned Subsidiaries
- Export Procedures and Documentation
- Imports Procedures and Documentation
- Foreign Trade Promotions: Incentives and Organisational Support
- International Monetary Fund (IMF) and World Trade Organisation (WTO)
- International Trade Institutions and Trade Agreements
Advantages of Import and Export
- It is one of the simplest routes of entering into the global trade and import and export generate huge employment opportunities.
- Requires less investment in terms of time and money when contrasted with other
methods of entering into the global trade.
- Is comparatively less risky when compared with different routes of entering in international business.
- As no nation can be 100% self-sufficient, import and export are very crucial for the functioning and growth of that nation.
- Can help Countries to access the best technologies available and best products and services in the world.
- It gives better control over the trade than setting up a market and the risk is considerably low.
Limitations of Import and Export
- It includes extra packaging, transportation and protection and insurance costs which build up the total cost of items.
- Exporting isn’t doable in the event that the foreign nation prohibits imports.
- Domestic organizations which are closer to the client could serve them better than firms outside their national borders.
- Merchandises are subject to quality standards any low-grade merchandise which is exported will result in Country reputation and remarks on countries.
- Obtaining licenses and documentation for foreign trade is a difficult and frustrating task.
- If you are not careful, you can lose grip on the domestic market and existing customers.
Solved Question for You
Q: Why businesses prefer importing and exporting?
Ans: Businesses prefer importing and exporting because it is one of the simplest routes of entering into the global trade. It requires less investment in terms of time and money when contrasted with other methods of entering into the global trade. It is comparatively less risky when compared with different routes of entering the international business.