Question

What risk-management strategies can an exporter/follow? Explain each strategy's advantages and disadvantages from the perspective of a small exporter

include what risk managment strategy you would follow for your product that is skin care an countries involved. UK country.

Answer 1

Ans.
The risks management strategies which an exporter will adapt with its advantages and disadvantages are as follows:

• Direct credit: the credit agencies support the exporters through giving direct credits to them. The exporter shall make a deferred payment sale.

Advantage: it protects the bank or the exporter from any type of claim

Disadvantage: if credit exceeds to a certain limit the exporter will have to pay it.

• Guarantees: it protects the exporters bid or failures for executing the contract. In the cases where the importer advances the funds, guarantees the refund if the exporter does not perform.

Advantage: it shall secure the risk factor for the exporter for a shorter time.
Disadvantage: when the time limit exceeds then the exporter shall bear the risk.

• Insurance: insurance of transportation, credits, foreign exchange risk, etc helps the exporter hedging against these types of risks.

Advantage: provides a lifetime protection to the exporter
Disadvantage: if any malpractice are involved then whole activity shall be at risk.

Holding the export management of a cosmetic company which is exporting its goods to the UK. The risk involved shall be of the transhipment, and tariff barriers on the goods. The company shall apply for direct diredits from the specific agency so that it can help it financially. For physical protection of goods we shall insure the transportation and the foreign exchange as well. We shall also apply for guarantees so that in any kind of bids or failures the product remains safe. The tariff barriers shall be paid as it's the mandatory part of the process.