Exporting goods and services refer to sending them from the home country to a foreign country. Similarly, Importing goods and services means purchasing or bringing them from the foreign market to the home country. This is the easiest way a firm can get into international business, as it requires almost no investment in setting up a production unit in a foreign country, only distribution channels are made to successfully import or export goods. Show
Advantages of Importing and Exporting:1. Easiest and Simplest: Exporting and Importing is the easiest way to enter into the international market as compared to any other modes of entry. Here, there is no need to set up and manage any business unit abroad, which makes the process easier. 2. Less Investment: Less investment is required in the case of exporting/importing as it is not mandatory for the enterprise to set up a business unit in the country they are dealing with. 3. Less Risky: If there is no investment or very less investment required in exporting/importing in the foreign country, the firm is free from many risks involved in foreign investment. 4. Availability of Resources: As the resources are unevenly scattered around the globe, it is very important for every country to export/import goods around the globe, as no nation can be 100% self-sufficient. 5. Better Control: Exporting/Importing can provide better control over the trade, as there is very less involvement in the foreign country. Everything is controlled by the home country and there is no need to set up a unit in the foreign country. Disadvantages of Importing and Exporting:1. Extra Cost: Since goods are to be sent to different nations, there is some extra cost, incurred in packaging and transportation of goods, which is a major limitation. 2. Regulations: Different countries have different policies for foreign trade, and sometimes it becomes difficult for a company to comply with the rules and regulations of each country they are dealing with. 3. Domestic Competition: The companies involved in exporting/importing have to face severe competition in the domestic country due to the presence of domestic sellers. 4. Country’s Reputation on Stake: Goods that are exported to different countries are subject to quality standards. If any goods that are of low quality are exported to any other country, the reputation of the home country becomes questionable. 5. Documentation: Exporting/Importing requires obtaining licenses and documentation for foreign trade from every country, which can become frustrating at times. 6. Multitasking: Managing business across different countries involves a lot of multitasking, which can be hectic for a company. Exporting outside Northern Ireland can change your business. Like any fundamental change to the way you trade, there are risks as well as benefits you should consider. You should weigh them up before starting to move into overseas markets. Advantages of exporting
Disadvantages of exporting
There are ways you can manage the risks of exporting. Tax considerations when exportingYou will have different responsibilities for VAT depending on whether you sell to other European Union (EU) countries or export your goods outside of the EU. If you sell to other countries in the EU, you must keep records and submit details of these sales on your VAT return. If you have a high level of sales to EU countries, you must complete an Intrastat Supplementary declaration. Read an introduction to Intrastat. If you sell to countries outside the EU, you must keep documents that count as proof of export. These must identify:
In both cases, most goods you export will be zero-rated for VAT. You should check with HM Revenue and Customs (HMRC). What are the advantages of export and import?While importing products can help businesses reduce costs, exporting products can ensure increasing sales and sales potential in general. Businesses that focus on exporting expand their vision and markets regionally, internationally or even globally.
What are the disadvantages of exports?Disadvantages of exporting. Supply chain disruptions. ... . High up-front costs. ... . Export licenses and documentation. ... . Product adaptation. ... . Political disruptions. ... . Cultural hurdles. ... . Exchange rate fluctuations. ... . Multi-currency payments.. What are the advantages and disadvantage of exporting?You could significantly expand your markets, leaving you less dependent on any single one. Greater production can lead to larger economies of scale and better margins. Your research and development budget could work harder as you can change existing products to suit new markets.
What are two disadvantages to importing goods?Disadvantages of importing:. Foreign exchange risk. There is the danger that there will be a sudden large change in the currency exchange rate. ... . Piracy risk. Even if rare, this possibility must be considered.. Political risk. There are many scenarios where this may be a hindrance. ... . Legal risk. ... . Cultural risk.. |