8. Selling
International trade is the exchange of goods and services between different countries. Depending on what a country produces and needs, it can export and import.
Governments can control international trade. The most common measures are tariffs or duties and quotas. A tariff is a tax on imported goods, and a quota is the maximum quantity of a product allowed into a country during a certain period of time. These measures are protectionist as they raise the price of imported goods to “protect” domestically produced goods.
International organizations such as WTO and EFTA regulate tariffs and reduce trade restrictions between member countries.
There are some reasons why countries trade. They are: countries have different natural, human and capital recourses and different ways of combining these recourses, they are not equally efficient at producing the good and services that their residents demand. The decision to produce any good or service has an opportunity cost, which is the amount of another good or service that might otherwise have been produced. Given a choice of producing one good or another, it is more efficient to produce the good with the lower opportunity cost, using the increased production of that good to trade for the good with the higher opportunity cost.
When a country can produce more of a good with the same recourses that another country can, it is said to have an absolute advantage in the production of that good. If the second country has an absolute advantage in producing a good that the first country wants, both will be better off if they specialize and trade.
Companies can choose from various methods to establish their products in a foreign market. One option is to start by working with local experts such as sole agents or multi-distributors, who have a specialist knowledge of the market and sell on behalf of the company. This often leads to the company opening a local branch or sales office. Another option is to sell, or give permission to use, patents and licenses for their products. They may wish to start by manufacturing in the export market, in which case they can either set up a local subsidiary or a joint venture with a local partner.
As it will be helpful for both countries as all the goods will be exchanged there are many advantages and disadvantages of the importing and exporting procedure, some of them are explained below:
Importing and exporting forms a proper means of foreign transaction that will form a major help during the failure of manufacturing particular items.
This will also help in increasing business opportunities as different stock items will be exchanged.
His will also improve the business inter relationships as several contacts will be developed for stocks exchange.
Importing and exporting of products will also increase the countries financial economy as exporting of stocks will result in a very heavy profits as foreign standards deal in big margins.
Strictly speaking the more the transactions that takes place more will be improvements in between 2 countries.
Importing and exporting of goods will form a major event as all the products cannot be available in a single place, the main advantage is that one has always got a chance of exchanging many items from wherever it is available. For example one country will be having a product like cotton and may not have specific instruments to utilize cotton usage. So the thing is to improve by importing machinery from other place.
Importing of goods can take place in various forms, that are through ships, planes, etc.
This forms a major help whenever some natural calamities occur like earthquakes, storms, Tsunami etc. Here importing comes to a main advantage as there will be a huge loss of property if a natural calamity occurs.
There are also many disadvantages as importing and exporting are concerned some of them are:
1. The cost of transportation will be very much higher as the goods have to be transported from one country to another which proves to be very far away from each other.
2. Heavy taxes will be included when many products are imported from a very far away place.
3. No proper delivery guarantee will be there as the interaction takes from country to country.
Speaking about selling it is important to mention about wholesalers.
A company which sells goods in large quantities (in bulk) is called a wholesaler distributor (or wholesaler). Wholesaling provides channels of distribution. The wholesaler is an intermediary between the producer and the retailer. In home trade three types of wholesaler can be distinguished:
1) The wholesaler who for a period owns and warehouses goods, but carries out no process in connection with them.
2) The wholesaler who owns and stores goods and prepares them for sale.
3) The wholesaler who organizes the distribution of a commodity but doesn’t actually handle it as, for example, the motor-car distributor.
Retailing is a business of selling products to the general public. Most retailers sell from shops or stores which are called outlets. Many countries have large retail chains which are organized nationally and sell a standardized selection of products. Their outlets are often in shopping centres (US malls), where there is a large variety of stores in the same location.
Many large retailers operate from out of town locations with parking facilities, known as either hypermarkets (over 30000 square metres) or superstores (under 30000 square metres). They may be on a retail park, where there are a number of large stores.
Department stores such as Harrods in London are large shops which sell wide variety of products, usually from a city centre location. As the name suggests, they are organized in departments, each with its own manager.