Import Export

INTERNATIONAL
TRADE (IMPORT-EXPORT)
Prepared By
Abhijit Kalbhor (10119036)
Manish Dev (10119045)
Rahul Krishna (10119063)
Rajneesh Tiwari (10119064)
Saket Tiwari (10119069)
Sumit Kumar (10119084)
Mahesh Ughade (10119087)
Utkarsh Gupta (10119088)

INTRODUCTION

International trade is the exchange of capital, goods,
and services across international borders or territories.in most countries,
such trade represents a significant share of gross domestic product (GDP).

While international trade has been present throughout much of history
(see silk road, amber road), its economic, social, and political importance
has been on the rise in recent centuries.

Industrialization, advanced in technology , transportation, multinational
corporations, and outsourcing are all having a major impact on the
international trade system.
Major Benefits of International Trade

To acquire a variety of goods and services, to reduce cost of production,
to increase incomes and employment, to learn about advanced technical
methods used abroad, and to secure raw materials.

Determinants of Trade

Major determinants of exports.

Presence of an entrepreneurial class;
Access to transportation.
marketing, and other services.
exchange rates
government trade and exchange rate policies.

Major determinants of imports.

Per capita income.
price of imports.
Exchange rates.
government trade and exchange rate policies.
Availability of foreign exchange.
Volume of Trade

World trade approached eleven trillion (U.S.) in 2004 and was triple
what it was in 1990.
Services trade accounts for about 25 percent of total trade.
Since 1970, average annual growth in world merchandise exports is
estimated at about 12 percent.
The industrial market economies account for 70 percent of global trade.

India: Import-Export Growth
Major Developments in Trade

The establishment of the World Trade Organization (WTO) as a
permanent trade organization.

The introduction of rules under the WTO to govern trade in services,
trade-related intellectual property, and investment measures.

The marked increase in the establishment of regional trading
arrangements such as NAFTA, MERCOSUR, etc.

Growing role of developing countries in world trade.

Increasing participation of small and medium-sized businesses in
export trade.

The dynamic role of services in todays economy and continued growth
in trade in services.

Globalization, competitive pressures and the reorganization/relocation
of value-added activities.
IMPORT AND
EXPORT
STRATEGIES
Characteristics of Exporters

The probability of a companys being an exporter increases with the size of
the company

Export intensity is not positively correlated with company size

The largest exporters in the United States also are among the largest
industrial corporations

Smaller exporters make smaller shipments; larger exporters make larger
shipments
9
Exporting

Expands sales and profits

Achieves economies of scale and reduces the unit costs of production.

Is less risky than DFI because it does not require the same degree of
capital.

Allows companies to diversify sales location.
10
As companies learn more about the process of exporting,

They tend to export to more countries

They tend to export to more dissimilar countries which are located further
away

They tend to export a larger percentage of their sales.

11
12
Phases of Export Development
The following figure summarizes the various phases
of exporting.
Entry mode depends on ownership advantages of the company, location
advantages of the market, and internalization advantages of integrating
transactions within the company.

Companies that have lower levels of ownership advantages either do not
enter foreign markets or use low-risk strategies such as exporting.

Strategic considerations affect the choice of exporting as an entry mode
13
In designing an export strategy, a company must

Assess export potential

Get expert counseling

Select market or markets

Set goals and get the product to market
14
Importers need to be concerned with procedural and strategic issues

An import broker is an intermediary that helps an importer clear customs

The Role of Customs Agencies

Customs agencies assess and collect duties and ensure import regulations
are adhered to.
Drawback provisions allow U.S. exporters to apply for a refund of 99 percent
of the duty paid on imported components.

Documentation

Importers must submit to customs documents that determine whether the
shipment is released and what duties are assessed.

15
Companies use external specialists for exporting before developing internal
capabilities

Companies may market their products either directly or indirectly through
external specialists or intermediary organizations

16
Financial issues relating to exporting:

Product price

Method of payment

Financing of receivables

Insurance

17
Export pricing is influenced by:

Exchange rates

Transportation costs

Multiple distribution channels

Insurance costs

Banking costs
18

Methods of payments are

Cash in advance

Letter of credit

Documentary collection or draft

Open account
19
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LETTER OF CREDIT
Review Questions
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What are the major benefits of international trade?

What are some determinants of exports and imports?

INTERNATIONAL

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