Why? They want to increase their market.
Meanwhile, international trades also bring about benefits to consumers.
For example, there are more choices and availability of products for them, leading to low prices of products because of competitiveness.
The quality of products are is higher, so is the quality of customer service.
The opportunities and threats of an international trade are shown below.
In every country, the government will definitely set some trade barriers to protect their local businesses.
This has also become one of the aspect to consider while going into an international trade.
The trade barriers are such as:
- Tariffs
Import duty or surcharge on the price of goods entering a country. This is to increase the price of import goods, which helps local producers to compete more effectively with foreign producers.
- Quotas
Similar to tariffs, but this is a limit on the amount of goods allowed into a country.
- Subsidies
Rather than taxing imports, the government helps its local producers by subsiding their money. This effectively makes local products more attractive to buy.
- Exchange Control
Government's restriction on the amount of foreign currency available for consumers' purchase. For example, if a government wishes to reduce the flow of imports from China, it can set limits to the amount of Chinese yuan that the citizens and businesses can get hold of to buy Chinese products.
- Non-tariff Barriers
Examples are such as government contracts given to local companies even where their tenders are not competitive, insisting on technical standards for locally produced products that are different from imported products.
So, before a company makes its decision whether to go for international trade, it must consider all of these factors.
This is good illustration of a typical business model. In this age, it's necessary for the businesses to understand and study the SWOT analysis, and make strategy according to this.
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