Question

The purpose of this assignment is to understand the terms import and export, and then explain the advantages or disadvantages of buying imports rather than buying domestic products. You could, for instance, write about an imported automobile, stereo, or household appliance that you bought or considered buying. Include all of the following points in your discussion.

1. If you were a retailer, would you want to sell domestically made goods or imported items? Please explain why you made this choice.
2. If you wanted to sell a good or service to customers in other countries, what sorts of items do you think you could export?
3. In your opinion, should the United States’ Federal Government support companies that want to enter export markets? Please explain.

Answer 1

Advantages and disadvantages of exporting

Exporting outside Northern Ireland can change your business. Like any fundamental change to the way you trade, there are risks as well as benefits you should consider. You should weigh them up before starting to move into overseas markets.

Advantages of exporting

• You could significantly expand your markets, leaving you less dependent on any single one.

• Greater production can lead to larger economies of scale and better margins.

• Your research and development budget could work harder as you can change existing products to suit new markets.

Disadvantages of exporting

• Unless you're careful, you can lose focus on your home markets and existing customers.

• Your administration costs may rise as you may have to deal with export regulations when trading outside the European Union.

• You will be managing more remote relationships, sometimes thousands of miles away.

• In overseas markets, you may lose some of the control that you are used to at home.

• You will need to think of your new market differently to the home market. They will be different customers with their own reasons for buying your products.

• Advantages of Importing:

  Importing raw materials and goods is one of the paths of increasing the profit margins. There are number of benefits in importing the goods, such as high quality, low prices, and benefits related to the international trade. An importer can have the comparative advantage which means lower prices (Jones, 2006). Also the importer can have the much cheaper products from the foreign market due to low labor cost, low taxes etc. in terms of quality, the importer can have the higher quality goods and produce the finished goods with high quality and extend the business profit margins. In some countries, government provides the support to the importer for developing the trade relations (Nelson and Winter, 2007).

• Advantages of Importing:

  Importing raw materials and goods is one of the paths of increasing the profit margins. There are number of benefits in importing the goods, such as high quality, low prices, and benefits related to the international trade. An importer can have the comparative advantage which means lower prices (Jones, 2006). Also the importer can have the much cheaper products from the foreign market due to low labor cost, low taxes etc. in terms of quality, the importer can have the higher quality goods and produce the finished goods with high quality and extend the business profit margins. In some countries, government provides the support to the importer for developing the trade relations.

There are a variety of reasons for importing goods, one of which is the benefit for the global economy. Medical equipment, smartphones, and many different types of food are just a few products that we rely on every day that wouldn’t be possible without imports. The modern world also relies on imports to build sustainable products. Some items like microchips, wires, and oil are imported and used to build or operate local products.

In today’s climate, words like “import” and “export” trigger adverse reactions. International trade influences the strength of local economies, the unemployment rate, and opportunities in business. While the stability of the local economy is essential, one of the ways it maintains its balance is through international trade. Developing economies rely on international exports to stay afloat.

The importance of imports to countries in Africa and other developing nations cannot be understated. Countries rich in raw materials and resources bolster their local economy and level the playing field by exporting sought-after goods and materials to countries around the world where these materials aren’t available. One could say that imports and exports level the economic playing field for developing nations.