Essay On Benefits Of International Trade

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Benefits of international trade Trading internationally provides businesses an opportunity to expand their activities to the overseas market s providing them with higher sales volumes which in turn means higher profits for businesses. Another benefit of international trade is improvement of organization’s ability to compete within its domestic and foreign markets due to increased awareness of current trends in product quality, packaging, product’s design and development. Businesses also can take an advantage of inability to produce some products locally to engage in import operations. This can be reached if its cheaper to import product to country instead of producing it locally. Moreover, businesses can try to export products and services which have not been much popular within its borders. Products and services which were not popular in domestic market may appear to be popular in foreign markets due to cultural, demographic and political differences. Engaging in international trade reduces reliance of organizations on their domestic market. Though risks can not be overcome totally, they can be spread. For instance, if business does its operations in US dollars it may want to trade Germany in Euros to reduce exchange rate risk between US dollar and Euro. The key element to succeed in international trade is being put in touch with right people, which can be reached with the help of specialist from UZ bank group which is the one of largest trade service organizations in the world. The specialists of UZ bank group understand problems and issues that may arise when developing overseas businesses. Identification of suitable markets People all over the world have different needs and successful international trade should be based on thi... ... middle of paper ... ...payment like documentary credit or payment in advance. Avoid providing of excessive credit period or excessive credit limit to the buyer in order not to experience working capital problems. Ensure that sales contract or documentary credit does not contain any ambiguous terms that may be subject to future disputes. Always consider cultural differences and language barriers when dealing with buyer. Use the same currency when buying and selling in order to minimize exchange rate risk. It is also possible to use derivative instrument to hedge risk enter forward contracts and option contracts to reduce exchange rate risk. Insure against losses from transit risk via usage of insurance. Set representative office in a buyer’s country in order to deal with non-payment or non-acceptance of the goods. At last but not least have a contingency plan against adverse events.

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