The Issues Pertaining with the Export and Import Transactions That Are Conducted by the Organizations - Essay Example

? EXPORTING AND IMPORTING AFFILIATION: This essay discusses about the issues that are pertaining with the export and import transactions that are conducted by the organizations. The government plays a positive role in the international trade arenas of the country. There are high chances of goods being damaged during transactions due to different reasons; therefore proper measures need to be made to avoid such situations. E-commerce and internet marketing has caused the import and export transactions to take place efficiently but has its limitations and challenges associated with it. Table of Contents Abstract 2 Table of Contents 3 Introduction 4 Government’s role for firms in gaining international competitiveness 4 Goods being damaged or lost in an export and import transaction 8 Managing the losses and risk 9 Challenges faced by exporters & importers by E-commerce and Internet Marketing 10 Conclusion 12 References 14 Exporting and Importing Introduction Globalization is a very important element for consideration by majority of the organizations. In the present era all firms are striving for becoming a global firm so that they can gain a maximum level of competitive advantage and allow their firm to gain more success and profitability. International trade is a common practice by organizations so that they can gain their status of having a global presence. Export and import therefore is becoming common in the organizations, organizations go for export activities to explore new markets and gain more profits. Organizations also go for import activities to become a cost effective business and also provide consumers with high quality products (Zhu and Trefler 2005). The following discussion focuses on the role that governments play in making their organizations competitive in the international market. The advantages that are pertaining with the import and export transactions are also discussed. The ways the goods may be lost during a transaction and how to minimize those losses. Internet is a new, faster and efficient way of conducting transactions but it may involve a high level of risk with it. Government’s role for firms in gaining international competitiveness Governments tend to play a positive role in the process of firms to compete internationally. The laws and regulatory framework of any country is extremely important for any organization so that they can successfully conduct their export and import business. Governments need to protect the domestic interest of their country as well as give consideration to the international competitive market. It is usually an argument that is imposed by the governments of any country that they have to give protection to the organizations that have recently established in the country from the foreign competition and that are why they restrict the import of some products in the country for certain time duration. In these cases, the government tends to prohibit or reduce the level of imported products so that protection can be given to the new emerging industries. Also the governments at times tend to introduce quotas or allow the imported products to become more expensive and the tariffs must be imposed as well (Zhu and Trefler 2005). This policy of protecting the new industries in the country can be a danger to the economic level because the domestic products may not be having that quality and the consumers of the society may not be benefitted by this. There are chances of economic stagnation being observed in the country. It is the utmost responsibility of the government of any country to make sure that their economy is running efficiently and competitive level products are being provided to their society. The government therefore also a bear in mind that international competitiveness needs to be enhanced for their industries and therefore this alternative is kept available apart from the protection policies being implemented by the government. The governments of any country are highly concerned about the import and export of goods that are taking place in the country. While conducting international trade the organizations have to go through the various trade barriers. The trade barriers consist of laws imposed by the governments, the various regulations of the country, the policies and practices of conducting business activities in the country on exporting and importing of goods. This is important so that the domestic products can be protected from the competition of foreign products being launched in the market (Joshi 2009). The governments play a major role in imposing trade barriers on the export and import businesses for the protection of their domestic economy and ensuring that the gross domestic product level of the country is always more on the increasing trend rather than the decreasing trend. This is one of the important reasons why governments are highly interested in the export and import business activities that are taking place in the country. The government sometimes tends to impose restrictions on the international trade activities of goods and services that are taking place in the country (Anderson and Wincoop 2004). There are a lot of advantages present for international trade. They are as follows (Daniels et al 2007): The competitiveness of the organization tends to increase at both the domestic and international level. A competitive firm tends to become more profitable and successful in the industry. International trade open new ways and allows the organization to grow at a high level. The firm observes a high level of sales when they are involved in the export and import business as this allows the target market to be catered at a wide level. Many valuable customers may become loyal due to these international transactions. By the exporting of goods, the firm is able to capture a large market share and they have a share in the global market competition as well. The dependency factor that is present on the current markets is highly reduced once the organization gets involved in the international trade sector. The firms get to know more about advancement in technology once they are in the process of having international trade transactions. Locally the firms are in a position to provide exported items to their valuable customers. This tends to increase the potential level of sales for the present range of products for the organization. The market fluctuations that usually take place tend to stabilize once the organization becomes involved in the transactions of international trade. The international trade transactions also help organizations to be involved in the business expansion processes, by conducting import and export transactions the organization gets exposed to new market arenas that allows their business to succeed. International trade allows the level of production capacity to be sold in excess. When the organization is known for conducting international trade in the global market then they tend to have a strong position in the domestic market. The government is highly concerned about the successful stability level of the organizations of their country and also of the citizens of their country. This is the reason that by studying the above advantage of international trade, governments are involved in the export and import matters and have imposed their regulatory policies as well so that the interest of the local organizations is also protected (Joshi 2009). Goods being damaged or lost in an export and import transaction There are firstly and mainly the governmental rejections present for the goods being damaged or lost in the transactions because of the government not in the favor of approving the goods. The importer country may have that good banned in their country. An example for this case can be taken as Singapore. Singapore has a restriction on the import of chewing gums in their country. Some other countries have a restriction on importing any refurbished equipment. If organization even after the knowledge of the restriction go on to import and export such goods then there are high chances of losses of goods during transactions. The solution for this is to conduct thorough research about the product being imported or being exported to any country. Goods have the chances of being refused by the importer if a proper labeling is not present on the products along with the specifications. The reasons why goods may be damaged or lost in an export/import transaction are as follows (Antweiler and Trefler 2002): Goods are accidentally lost or damaged while their transactions are taking place. The goods that are damaged after they are packed are the responsibility of the person who is conducting the shipping transactions. The importer and exporter need to have agreed terms from before on how much each party will bear the loss in such a case. If the damage in packing lies with the exporter then the exporter will have to bear the loss and make arrangements accordingly. The freight forwarder needs to be contacted to claim the insurance of the cargo. The importer may have to have all the proper documentation claims. The exporter is mainly responsible for ensuring that all proper packaging of goods have taken place and under proper guidance and regulations as well so that no problems occur (Sullivan et al 2003). Goods are at times destroyed while they are being imported and exported. There are occasions when the importer may show a rejection for the goods received because of the mistakes that have been occurred by the exporter of the product. Wrong type of goods may have been exported by the exporter. The goods may not have been possessing proper labeling or packaging and this may be the major cause of rejection. Remedy: The solution in such a case is to go through the export and import assistance or similar bodies that are present in the country so that the proper information about the import and export aspects of the country can be known. Also it is recommended that the organization should hire someone to look after the shipments of export and import so that this particular strategy allows the mistakes to be overcome such as of labeling and packaging (Joshi 2009). Goods have the risk of being stolen during their import and export transactions Managing the losses and risk It is important for the import and export organizations to be well aware of the losses that occur during the transactions and how the loss risk should be managed by the organizations. All possible losses and factors of risk need to be given due weight so that their seriousness can be measured. The more serious any risk the higher the weight it needs to be given (Grossman and Helpman 1995). The organizations need to obtain insurance for them to cover the losses that they have obtained during the transactions. The insurance policy may vary from country to country. Challenges faced by exporters & importers by E-commerce and Internet Marketing The electronic commerce way of doing business is becoming a common phenomenon by majority of the organizations now. The e-commerce business transactions are done online for the businesses. In the export and import business, it is usually considered a feasible option by the organizations that they conduct their business activities of importing and exporting goods through an online network. The challenges that are faced by the exporters and importers due to the internet marketing aspects and the internet based communications are that this medium is innovative and has been observing changes at a constant pace. The internet medium needs to be adjusted for each of the market segments that are being catered. There are many users that still don’t use the internet medium for conducting international trade (Eaton and Kortum 1999). Also, according to statistics there have been around limited number of people who are familiar with English as a first language and therefore the importers and exporters may face issues regarding the language factors. This is a strong limitation that all countries are not having proper knowledge of the English language and therefore this may be a major challenge being faced in online businesses. Organizations that are involved in the export and import transactions may face many types of risk while they use the e-commerce and internet marketing mediums for conducting their business activities. The challenges that exporters and importers may have to face are as follows (Goldstein et al 2008): The risk of buyer insolvency, that after the commitment of transaction buyer is not in a position to make the payments. The buyer may make online commitments but at the time of payment they may back out and the organization may have to face some losses of start up. There are chances that buyer may tend to reject the goods. A non-acceptance situation may be observed from the side of the buyer as the buyer may state that the goods are different from their specifications. There is an element of credit risk involved that involved the buyer being involved to have the goods possession before the buyer has made the payment. The major risk that may be involved is offending the regulatory risks and if the exporters are not aware of the regulatory laws of doing business over the internet then this may cause the business from preventing their transactions. There can be governmental action risks that may prevent from the transaction to take place successfully in the market. Through online marketing the organizations need to make sure that their customers are always satisfied. This is a limitation because it is difficult to deduce whether the customers are satisfied or not. There is no face to face interaction occurring and therefore the satisfaction level from the transactions occurring is difficult to judge. For organizations to be running successfully, it is important that their customers keep coming back. The other limitation that is present is that the communication with the customers is difficult, offline methods of communication need to be implemented to attain the satisfaction level of the customers (Grossman and Helpman 1991). The internet marketing and e-commerce way of doing business is a great opportunity for the organizations to conduct their import and export transactions. Online marketing is easier to commence with by placing advertisements in the search engines and then start growing gradually. All types of product information can be strategically placed on the internet so that it attracts many visitors. The main aspect to focus on the internet marketing that the customer queries should be addressed at a fast pace and all the product information and product availability should be constantly updated to avoid any future problems misinformation issues (Joshi 2009). Conclusion From the above discussion it can be observed that export and import transactions have their advantages and also have their element of risks involved with them. Governments tend to play a positive role in allowing their organizations to compete internationally but at the same time they imply the protection policies for their own domestic organization so that their industries can gain a good amount of market share. Goods have a tendency of being lost or being damaged during the transactions. The organizations need to make pre hand clauses of the losses that each party would bear in any particular condition that may occur. Organizations need to be equipped with ways to minimize their losses and run their import and export transactions successfully. The internet and ecommerce way of doing business has made things easier for the organization but they have to bear in mind the risk that occurs due to the transactions over the internet. References Anderson J. and Wincoop, Evan. (2004). “Trade Costs,” Journal of Economic Literature. (75) 31– 58. Antweiler, W. and Trefler, D., (2002). Increasing returns and all that: a view from trade. American Economic Review 92, 93– 119. Daniels, J., Radebaugh, L., Sullivan, D. (2007). International Business: Environment and Operations, 11th edition. Prentice Hall. Eaton, J. and S. Kortum (1999). “International Technology Diffusion: Theory and Measurement,” International Economic Review 62, 83– 129. Goldstein, Joshua S., and Pevehouse, Jon C. (2008). International Relations. 8th ed. New York: Pearson Longman. Grossman, G. and E. Helpman (1991). 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