What do you understand by Export and Import? Mention their advantages and limitations.
What do you understand by Export and Import? Mention their advantages and limitations.
Selling of goods and services from the home country to a foreign country is known as export, while buying of goods and services and bringing them into one's home country is known as import. The import and export of goods can be done either directly or indirectly. When the firm itself approaches the overseas buyers or sellers and performs all the formalities related to import and export of goods, it is referred to as direct importing or exporting. When the firm's participation in the import and export operations is minimum and most of the formalities are carried out by some middlemen, it is referred to as indirect export or import. In this case, firms donot directly deal with the overseas customers.
Advantages:
1. Easy way: Importing/exporting is the easiest and least complex way.
2. Less investment: Exporting and Importing does not require as much investment for carrying out business operations.
3. Low risk: The risk is low in importing and exporting as compared to other modes of entry into the international business.
Limitations:
1. Increased cost of a product, additional packaging, transportation and insurance cost are incurred in transferring the goods.
2. Less knowledge of the foreign market. Basically, the export firms produce goods in the home country and send their goods to foreign countries. Hence, export firms do not have contact with the foreign market.
3. No longer feasible when foreign country restricts imports.
Selling of goods and services from the home country to a foreign country is known as export, while buying of goods and services and bringing them into one's home country is known as import. The import and export of goods can be done either directly or indirectly. When the firm itself approaches the overseas buyers or sellers and performs all the formalities related to import and export of goods, it is referred to as direct importing or exporting. When the firm's participation in the import and export operations is minimum and most of the formalities are carried out by some middlemen, it is referred to as indirect export or import. In this case, firms donot directly deal with the overseas customers.
Advantages:
1. Easy way: Importing/exporting is the easiest and least complex way.
2. Less investment: Exporting and Importing does not require as much investment for carrying out business operations.
3. Low risk: The risk is low in importing and exporting as compared to other modes of entry into the international business.
Limitations:
1. Increased cost of a product, additional packaging, transportation and insurance cost are incurred in transferring the goods.
2. Less knowledge of the foreign market. Basically, the export firms produce goods in the home country and send their goods to foreign countries. Hence, export firms do not have contact with the foreign market.
3. No longer feasible when foreign country restricts imports.
