Practice Questions 1
1.
Please indicate why it is important to understand how to export successfully. 2.
Do you think international trade is desirable? Please explain. 3.
What is INCOTERMS? How does this affect imports and exports.
4.
List the trade theories that you know about and explain their relevance to foreign market entry.
1.
Importance of Understanding Successful Exporting: Understanding how to export successfully is crucial for several reasons:
Economic Growth: Exporting can contribute to economic growth by expanding market reach and increasing sales opportunities for businesses.
Diversification: Relying solely on domestic markets may limit growth prospects. Exporting allows businesses to diversify their customer base and reduce dependence on a single market.
Competitive Advantage: Successful exporting can provide a competitive advantage by allowing companies to tap into new markets, gain a broader customer base, and potentially achieve economies of scale.
Job Creation: Increased international trade often leads to job creation as businesses expand their operations to meet the demands of global markets.
2.
Desirability of International Trade:
Yes, international trade is generally desirable.
Economic Benefits: International trade promotes economic efficiency by allowing countries to specialize in the production of goods and services in
which they have a comparative advantage.
Consumer Benefits: Consumers benefit from a wider variety of goods at competitive prices, as international trade fosters competition and innovation.
Global Cooperation: International trade can contribute to diplomatic and political cooperation by creating interdependence and shared economic interests between nations.
3.
INCOTERMS and their Impact on Imports and Exports:
Definition: INCOTERMS, or International Commercial Terms, are a set of standardized three-letter trade terms used in international contracts to define the responsibilities of buyers and sellers in the shipment of goods.
Impact on Imports and Exports: INCOTERMS specify when the risk and responsibility for goods transfer from the seller to the buyer. They include terms like FOB (Free on Board), CIF (Cost, Insurance, and Freight),
and EXW (Ex Works). Proper use of INCOTERMS helps prevent misunderstandings, reduces risks, and clarifies the obligations of each party in international transactions.
