International trade

Introduction In the recent past, international trade has grown over to become an integral part of economy of any country. Imports and exports constitute the international trade.Advertising We will write a custom essay sample on International trade specifically for you for only $16.05 $11/page Learn More A country that has more imports than exports is referred to as a net importer while one that has more exports than imports is referred to as a net exporter (Colander, 2010). This paper answers some questions about surplus imports in the US, effects of international trade on GDP, effects of government actions on tariffs on international trade and relations, and foreign exchange. Import surplus in the United States of America have several effects, both on the economy as a whole and on the businesses in the country. Imports surplus in the US means that there are fewer jobs for the American citizens since their domestic production is less due to more imports than exports. This also means that the country is entering into debt in order to have a surplus imports. The countries trading with the US usually lend it money whenever the imports are higher than the exports and this is detrimental to the US economy. Some of the products that the US runs a surplus imports are oil, motor vehicles, and consumer products and electronics. The excess of the production by the GDP will be exported to the international market (Colander, 2010). However, if a country is a net importer, international trade may be detrimental to it, since it will make the country borrow in order to trade and this has a negative effect on the economy. If a country is a net exporter, the domestic markets will be boosted to produce more and import less while the vice versa is true. International trade has also beneficial effects to the university students. This is because most university students see an opportunity to export their skills once they graduate from university. Inter national trade therefore provides employment and innovation avenues to the university students who may otherwise lack jobs within their native countries. Government choices in terms of tariffs and quotas In order to manage their economies, governments will enact some rules and regulations aimed at protecting their country’s GDP if it’s a net importer, or enhancing its GNP if it’s a net exporter. In achieving this, most governments enact some policies and guidelines in form of tariffs and import quotas (Wendy Colin, 2003).Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More Trade tariffs are put in place in order to safeguard the domestic markets from the would-be exporters from other countries. This is done mainly to protect domestic products through ensuring that they are consumed locally. Trade tariffs and quotas therefore put stringent requirements for importing some pr oducts that it becomes almost impossible for a country to export a product into the other country. In doing so, it boosts the GDP since local products are consumed locally. These choices on tariffs and quotas also put a strenuous relationship between countries because as a country enacts macro-economic policies to protect and boost its economy, it always does at the expense of its trade partners. Foreign Exchange Foreign exchange, always denoted as ‘forex’, is simply the conversion of one currency to another. This happens because different countries have different currencies and therefore, there is a need to attach a value of a particular currency in relation to the other currency. This occurs by the use of foreign currency rates which are defined as the exchange rates (Colander, 2010). Foreign exchange occurs on different accounts. First, when a person is trading in a foreign denominated currency, he/she needs to convert the currency he holds to the acceptable legal te nder in the trading country. Foreign exchange is also used to help a country to stabilize its own currency through buying and selling foreign currency reserves. This is done through buying or selling foreign currencies such as the pounds, yen, and buying dollars. The country may also buy dollars in order keep foreign currency reserves. Foreign exchange usually happens in commercial banks where a person holding any form of currency goes to the bureau de change in order to sell or buy another currency. These foreign exchange bureaus usually set an exchange rate to be used. The exchange rates are usually determined based on the purchasing power of a currency at a given time. America cannot restrict all goods coming from China because of several reasons. First, products exported from China to the US are not wholly manufactured in China. China, in addition to manufacturing and exporting, also acts as an assembly point for many Asian products and blocking all imports from China would virt ually block much of the imports from other countries as well. This would be detrimental to the relationship that the US has with the Asian countries. The US cannot minimize the imports coming from other countries because it needs trading partners where it also needs to export. The only way to maintain this relationship is also accepting to import some goods which are produced by other countries which have a comparative advantage over the US.Advertising We will write a custom essay sample on International trade specifically for you for only $16.05 $11/page Learn More References Colander, C. (2010). Macroeconomics. New York: McGraw Hill. Wendy, C., Colin, M. (2003). Journal of Financial Economics. London: Elseiver. This essay on International trade was written and submitted by user Kevin Randall to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here. International trade Introduction Nations all over the world strive to achieve stable economies through legislation of various policies. They do so in the attempt to woe investors to participate in activities that will develop and expand their operations. There is no country in the world that can exist without relying on foreign investors and foreign trading activities (Ilmanen, 2011, 33).Advertising We will write a custom essay sample on International trade specifically for you for only $16.05 $11/page Learn More This is due to the disparities in nature and amount of endowments in these countries. Exchange rate is an essential financial aspect that determines the level of a country’s participation in international trade. There are several factors that nations undertake which determine their exchange rates as evident in this essay. Definition Exchange rate is the value at which the currency of a country measures against the currencies of other countries. All countries in the word have exchange rates they use to determine the value of goods from other countries (Sarno and Taylor 2003, 11). This rate enables traders to know the value of their goods in the international market. How States Influence Exchange Rates Even though, a nation does not have an absolute right of deciding or fixing the rate at which its currency exchanges with those of other countries, there are some extents to which a state can determine these rates. These are steps a nation takes to ensure the exchange rate favours both local and foreign trading activities. Therefore, importation and exportation of goods and services ensures consumers and traders get a fair deal for their money and investments respectively. Political Stability Peace is an indispensable factor that promotes trading activities all over the world. Nations that strive to maintain peace within and outside their boundaries enjoy an influx of investors. This means that not only their investments are secure but als o their lives are saved. No one will ever wish to invest in a war prone country regardless of the profits the investor will get. However, countries that encounter civil strife discourage investors (Weither, 2006, 20). Their goods and services do not attract international demand; as a result, their value depreciates. Therefore, the more a government strives to maintain peace within and outside its territories, the higher the chances of enjoying favourable exchange rates. Growth Potential Investors are usually looking for countries that offer potentials of economic growth. Nations coming out of prolonged civil conflicts due to poor governance, those that have unexploited resources and those that open their boundaries to foreign trade, attract investors (Jha, 2011, 47). Some African countries are enjoying favourable exchange rates as a result of restructuring their government systems and assuming responsible leadership.Advertising Looking for essay on business economics? Let's se e if we can help you! Get your first paper with 15% OFF Learn More They have demand for modern technology, expertise and investments. This demand makes their currencies fetch high prices in the international market. Therefore, their exchange rates compete effectively with other currencies. The more a country offers investment opportunities to foreign investors, the better its exchange rate ranks. Balance of Trade It is not enough for a country to participate in international trade. However, nations should ensure there is a positive relationship between the volume and value of exports and imports (Ilmanen, 2011, 54). This situation has significant influence on a nation’s exchange rate. The more a country exports, the lower the exchange rate of its currency compared to other nations. Therefore, nations should ensure they export more goods than what they import. This means they participate in productive international trade that raises the value of their currencies. Stat e’s Debts Even though, most nations can not survive without relying on international bodies like the World Bank, for financial assistance, it is better for them to borrow as little as possible. The higher the amount of debts a nation has from global organisations or other nations, the higher her currency exchanges with those of other countries. This leads to an unfavourable exchange rate since the country is not economically independent (Schofield and Bowler, 2011, 96). However, countries with fewer debts have a strong command on international trade activities, and thus their currencies have high values. Therefore, to have favourable exchange rates nations must borrow as little as possible from other nations or international organisations. Interest Rates Investors expect high returns on their investments regardless of the risks involved. Foreign investors look for nations that offer high rates on investments in order to cater for operational costs and gain profits. Nations th at offer high interest rates on investments have without doubt attracted many investors. Competitions among investors become inevitable leading to high value for the limited currency of these nations (Clark, 2011, 33). However, countries that offer peanuts to investors discourage them leading to depreciation of the value of their currencies. Therefore, the higher nations offer returns on investments, the more the values of their currencies are appreciated.Advertising We will write a custom essay sample on International trade specifically for you for only $16.05 $11/page Learn More Conclusion Most nations find international trade a one sided activity due to high exchange rates that do not favour them. However, from the above discussion it is clear that such nations can influence the value of their currencies in international markets. Nations should strive to achieve conditions that facilitate foreign and local investments to stand high chances of favoura ble exchange rates. References Clark, I. (2011). Foreign Exchange Option Pricing: A Practitioners Guide (The Wiley  Finance Series). New York: Wiley. Ilmanen, A. (2011). Expected Returns: An Investor’s Guide to Harvesting Market  Rewards (The Wiley Finance Series). New York: Wiley. Jha, S. (2011). Interest Rate Markets: A Practical Approach to Fixed Income (Wiley  Trading). New York: Wiley. Sarno, L. and Taylor, M. P. (2003). The Economics of Exchange Rates. New York: Cambridge University Press. Schofield, N. and Bowler, T. (2011). Trading the Fixed Income, Inflation and Credit  Markets: A Relative Value Guide. New York: Wiley. Weither, T. (2006). Foreign Exchange: A Practical Guide to the FX Markets (Wiley  Finance). New York: Wiley.Advertising Looking for essay on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More This essay on International trade was written and submitted by user Jaden Santos to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here. International trade Major events in the world have triggered international marketing and globalization. According to Goldin, Reinert and World Bank (21), there are three major stages of international marketing and globalization. The first stage started in 1870 and ended in 1914 as a result of the First World War.Advertising We will write a custom assessment sample on International trade specifically for you for only $16.05 $11/page Learn More The second stage started after the end of Second World War and ended during the1970s. The third stage started after the end of the second stage and has continued up to the present moment. In most widely accepted definitions, globalization has been largely equated to the influence of international business and trade among various economies. As a matter of fact, the impact of globalization has been immensely felt when importing and exporting goods and services more than in socio-political life. Consequently, the world has become a global village since operations across the world have been decentralized. For instance, exporting companies have assumed the operations of international marketing in the same way as it is the case for local businesses. In other words, their competitors are located in oversees countries as compared to local rivals for local companies. There are a number of techniques used by international companies to be successful and especially those which export and import goods and services. This paper succinctly explores the concept of international trade and exporting business using Crystal International Corp. as case study. Crystal International Corporation This is an exporting company dealing with distribution services and freight forwarding. The company is based in New Orleans, Los Angeles, United States of America. It is well versed with matters of export management and consolidations. The company has so far made great in-roads since its inception and has already completed a number of transaction s in international trade. Moreover, Crystal International Corporation has been noted to be making more than six transactions in a year in exporting business. Some of the products that are currently exported include snacks, grocery products and specialty foods. As will be discussed, the company uses a number of techniques to win the international market and make profits. Among others, it has applied effective competitive analysis and capitalized on the strengths that it has and building strong mechanisms to counter the weaknesses and threats. International trade and Crystal International Corporation As noted earlier, the concept of international trade can be compared to globalization. Globalization refers to bringing international issues, especially in management together. International trade refers to exchange of goods and services internationally. International trade as a form of globalization was triggered by developments in major areas such as technology.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More For example, the development of railroads and steam engines was important in connecting various countries together. According to Key (5), international trade cannot be excluded in discussion of imports and exports. This is because traditional concept of international trade had movement of goods and services to and from a country and crossing of a country border. In essence, the classification of international trade is mentioned in exporting and importing of goods and services. However, the present concept of international trade has encompassed more than just making goods and services cross the border. For example, international relations and part of diplomacy issues have been equated to globalization. Since diplomacy and international relations have relations with export of ideas, it can be said that they form part of international trade. The only differentiatio n is that the real concept of international trade involves profitability of a company. Movements of labor and capital contribute to the concept of globalization. The two have helped in increasing capital flows in various nations, and the most benefiting nation being the United States of America. There are various benefits that can be drawn from globalization and international trade. For example, countries can produce goods which may have costs which are of lower opportunity costs. Also, it is possible to increase competition which can lower the prices for customers. In open economies, globalization and international trade can help in increasing advancement in technology as well as its innovation. Crystal International Corporation deals with international business. Specifically, the company deals with exporting of manufactured goods to other countries. It is considered as an international company because it has established itself in more than one country. It is based in America but h ad to move out and established itself in more than 70 countries. This means that its competition is not confined locally; rather, its competitors can also found in other countries. The company deals in exportation of household items and a few of electronics. It has managers who are fully qualified in matters of exporting and importation, and more so international trade. The biggest help has come from the commerce department departments and programs that help in understanding of international market. As would be analyzed, some of the programs that are used in making greater depths in the international market are like carrying out marketing research and application of modern forms of marketing techniques. These techniques have made to place the company in a good position in the international market to compete.Advertising We will write a custom assessment sample on International trade specifically for you for only $16.05 $11/page Learn More This company us es direct and indirect forms of exporting its goods and services. In this kind of business, the management of the company must consider the degree of control the company has in the competitive market. The company must also be ready to seize opportunities that present themselves in the market. This is the kind of marketing strategies and operations in the international trade that Crystal International Corp applies in the competitive market. On daily basis, the company strides to be bigger by day because the bigger the company or brand image, the bigger the possibilities of winning in the market. This company is big enough because it is already in more than 70 countries in the world. The management of this company is also highly qualified and therefore the possibilities of covering more grounds are very high. The following discussion looks at a number of strategies that this company has used to make impacts in the market. Marketing strategies for Crystal International Corporation Anal ysis of competition According to Doole and Lowe (236), a company that moves into the market without first analyzing the kind of competition in existence risks making huge losses. This is because looking at the outside of the market may not tell a lot about the strengths and weaknesses of existing companies in the market. This is one of the strengths of Crystal International Corporation, where, it has to first analyze its competitors before moving to new markets. Crystal International Corp deals with direct and indirect forms of exportation which need a lot of international trade skills and mostly on competition to succeed. This company has a number of competitors in international marketing/trade, and especially in exportation of goods and services. The biggest competitors are like, American Chung Nam, Weyerhaeuser, Du Pont, and Cargill among others. Even though these companies have been identified as not specifically dealing with the business of household items as Crystal Internatio nal Corp, they nevertheless form part of a big competition cycle. Carrying of situational researches Research is a very useful tool in management of any kind of business, and mostly in international trade (Botto 104). This is because researches establish the need to move into the business. A situation research is capable of establishing whether the company and its products and services can be accepted in a particular market. It has a great economic impact because the company makes to plan well. This is one of the strategies that this company has managed to employ effectively. Situational researches as applicable in this company help in establishing the suitability of moving its products in the new markets. Even where some products may not be needed in particular country due to issues such as culture, this company has made to modify and customize for the purposes of acceptance.Advertising Looking for assessment on business economics? Let's see if we can help you! Get your first paper with 15% OFF Learn More High technological ad advancement and use Technology can never be ignored when considering quality of goods and services. That has been recognized as the issue dividing successful and unsuccessful organizations and institutions. According to Boone and Kurtz (340), compromising quality in management and movement of goods and services due to failure in use of technology is just writing off the company. Crystal International Corp has established itself as one of the companies in the world in exportation of household items. High use of innovations and especially by utilization of technology has been argued to be the reason behind the successes in this company. Technology as used in this company has enabled to always improve on quality and level of production for this company. Therefore, this company is able to give high goods in terms of quality as well as mass production to manage competition. Inherent challenges Even though this company has widely developed its network in internationa l trade and especially in exportation, there are numerous challenges that it has been facing. However, these challenges have not managed to pull down its relevance in international business. Instead, it has made the company grow by leaps and bounds. Firstly, it is recognized that the company competes with companies which have covered lots of ground and are big in size and production. This company has faced lots of logistical challenges and some contractual issues. As well, international trade and more so in exportation business require a lot of resources which should be added regularly. Being a small company as compared to others which came before it, the company has had to cope with the fact that it does not have huge resources. The presence of these challenges in this company has not managed to deter success; though in small ways. Rather, some of these have only made the company cover more grounds in the market. Product life cycle in this company Product life cycle is a concept of management and refers to use of succession strategies when a product is moving through a life cycle. According to Stark (234), even products must move in stages, the same way human beings are born, and pass through some various stages before they finally die. Crystal International Corp utilizes all of the life cycle strategies for its product. Mostly, this is done from the point the raw materials are introduced in the company and finally getting to the final customers. When the raw materials for the household goods are entering the company, they have to be verified and must be bought in mass to ensure that cost is brought down. The next stage is to maximize the raw materials during the production of the household items and afterwards there is additional of values after their production before they get into the market. Effective marketing strategies are highly applied to make sure that the value of the products is passed to the right customers/final users. Conclusion Due to globaliz ation, trade has broken the tight physical borders that used to exist earlier on. Most successful companies in the world are those that have wider marketing base and possibly engaging in international trade. These are companies which have established themselves in overseas locations other than their countries of origin. In international trade, the strategies used in marketing are not the same as when a company is dealing with local competitors. The latter is mainly attributed to the fact that other countries may have different cultures as compared to local culture. For this therefore, any company must first carry out initial assessments in analyzing competition and readiness of the market. This paper has analyzed strategies used in international trade in order to wrestle with market competition. In addition, the paper has discussed Crystal International Corp; an international company dealing with exportation of household goods alongside other varieties of assortment goods. The paper has also focused on the strategies that have been put in place by the company in order to improve profitability. Finally, operational challenges that have been faced by the company in international trade have also been explored. Works Cited Boone, Louis Kurtz, David. Contemporary Business. Hoboken: John Wiley Sons, Inc, 2010.Print. Botto, Mercedes. Research and International trade policy negotiations: Knowledge and power in Latin America. New York: Taylor Francis, 2009.Print. Doole, Isobel Lowe, Robin. International marketing strategy: Analysis, development and implementation. Belmont: CengageBrain Learning, 2008.Print. Goldin Ian, Reinert, Kenneth World Bank. Globalization for development: Trade, finance, aid, migration, and policy. Washington. DC: World Bank Publications, Inc, 2006. Print. Key, Clement M. Principles of classification: Export and Import. Mooresville: Trafford Publishing, 2004.Print. Stark, John. Product lifecycle management: 21st century paradigm for product realization. London: Springer Verlag, 2011.Print. This assessment on International trade was written and submitted by user Puff Adder to help you with your own studies. You are free to use it for research and reference purposes in order to write your own paper; however, you must cite it accordingly. You can donate your paper here. International Trade