Introduction
Today, import and export centric industries are the most exciting markets for foreign trade. International trade is the exchange of goods and services between two or more countries. When goods (services) are brought in, it is called an import. When goods are carried out, it is called an export. International trade is essential in all countries, because the scare resources in a particular country are distributed unevenly between different countries and thus some countries are better producing some products than other is. Likewise, exporting is one of the key elements of international trade, which is the purchase, sale, or exchange of goods and services across national borders. One country’s exports become another country’s imports.
The small and medium enterprises in exporting
Small and medium enterprises (SMEs) must carefully assess the advantages and disadvantages of exporting before committing their ventures in the export business. While some SMEs enter the export business unintentionally after receiving a request to purchase from a foreign buyer, others make a deliberate move and conduct thorough research before entering a new market. Whether it is unintentional or deliberate move, SME need to evaluate and carefully assess the advantages and challenges of exporting before committing resources. SMEs must realize that entering an export business requires careful planning, some capital, market expertise, a quality product, competitive pricing, management commitment, and realizing the challenges and opportunities of foreign markets (2001). While there are no concrete rules that can help companies make decision to export or not and to become successful in exporting, understanding the advantages and challenges of exporting can help a smooth entry into new markets, keep pace with competition and eventually realize profit. Businesses enter the export market for a variety of reasons and it depends on the needs of the enterprise. However, internationally, their key goal is to promote growth. Exporting can help businesses to utilize their capacity more efficiently, expand their growth, and gain economies of scale and even out seasonal fluctuations in demand for their products. Exporting also lets them exploit technology & expertise. Exporting enables businesses to exploit unique advantages in technology and other areas such as pricing, packaging, delivery and after-sales service ( 2003). It also enhances competitiveness through interaction with international clients; partners, and investors, businesses develop knowledge of different cultural environments, insights into customer requirements, exposure to new technologies & ideas and competitors.
The risks of exporting
A particular element of risk is involved in all business activity and this needs to be recognized and managed to avoid or at least lessen future mishaps. Potential export risks involve greater complexity within the said business. Complex documentation and administration, the protection of intellectual property and geographical remoteness from markets and customers will be faced eventually by the enterprise in venturing internationally. Exporters will need to address more cultural, political, and legal issues ( 2002). Exporting may influence a business’s domestic activities and it may reveal capacity and productivity constraints and highlight the need for specific skills, so there will be a pressure on resources. Their financial exposure may be at risk too. Businesses must recognize that exporting will initially involve expenditure, which may affect cash flow and render them vulnerable to financial crisis.
The In and Outs of Importing
A country has demand for an import when domestic quantity demanded exceeds domestic quantity supplied, or when the price of the good (or service) on the world market is less than the price on the domestic market. There are two basic types of imports: 1. Industrial and consumer goods, 2. Intermediate goods and services. Companies import goods and services to supply to the domestic market at a cheaper price and better quality than competing goods manufactured in the domestic market (2005). Companies import products that are not available in the local market. There are three broad types of importers: the one looking for any product around the world to import and sell; someone looking for foreign sourcing to get their products at the cheapest price and one who uses foreign sourcing as part of their global supply chain. Importing helps SMEs in broadening their entrepreneurial horizons.
Conclusion
Starting an import business can be extremely profitable, especially during periods of global monetary fluctuations we are having now. Long-term success and profitability, however, will generally go to those entrepreneurs smart enough to understand that they need to learn how to take advantage business opportunities in times like these and start thinking about how to utilize their resources. Finding information on foreign markets is unquestionably more difficult and time-consuming than finding information and analyzing domestic markets.
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