International Trade: Export and Import

International Trade: Export and Import

As we know the most important macroeconomic variables are export, import and trade balance. When we sell goods and services abroad it is export and we buy international goods and services for our country it is import.

When nations export more than they import they have a favorable balance of trade. When they import more than they export the unfavorable trade exists.

Some countries may exports and imports goods and services it is called visible trade and some countries which haven’t got resources may exports and imports services it is called invisible trade

International trade: Investments

As we are know the most important macroeconomic variables are export, import, investment and trade balance.

When an investment is made, capital enters a country, enabling it to import manufactured goods to build new manufactured plant and to pay workers to build it. This plant provides people new jobs and can produces new manufactured for import.

Dividends, sum of money paid to shareholders out of earning, can be directed on investing country. For example, host country credits income to its balance of payment and investing country records a debit. Capital for investment can be restricted by requiring of government. On another hand, government may give the loan for companies to extended their capital abroad.

 

Visible and invisible trade

We have 2 kinds of foreign trade. In addition to visible trade, which involves the import and export of goods and merchandise, there is invisible trade, which involves the exchange of services between nations.

Tourism is a form of invisible trade

The technical skills to build projects are purchased when а nation hires engineers, usually from another country. The commissions and salaries that are paid to these people represent another form of invisible trade.

Millions of workers from the countries of southern Europe have gone to work in Germany, Switzerland, France. The workers send money home to support their families. These are called immigrant remittances. They are an extremely important kind of invisible trade.

A national balance of payment

The two most important categories in any nation's balance of payments are its visible and invisible trade. А third important category is investments.

Investments can have а crucial impact on а nation's balance of payments. Investments acts as а catalyst in economic growth.

After calculating all of the entries in its balance of payments, а nation has either а net inflow or а net outflow of money.

The most direct means of correcting а deficit in the balance of payments and having an immediate impact is by reducing imports. This can be accomplished by imposing tariffs (taxes), quotas (import restrictions), or both.

5. Documents Needed in International Trade and Incoterms.
Short for “International Commercial terms”-identify the additional costs, over and above the cost of goods, that the seller will invoice the buyer in international sales contract. They define who is responsible for arranging and paying for transportation, documentation, customs clearance and transport insurance
Documents: 1. Bill of Lading 2/ Sea Waybill 3/ Shipping Note 4/ Dangerous Goods Note/ 5/ Air Waybill 6/ Certificate of Insurance
Group 1: The E Term (Departure)
Group 2: The F term (Free, main carriage not paid by the seller)
Group3. The C term (Main carriage paid by the seller)
Group 4. The D terms (Delivered/arrival)

Forex.

" Forex" is the Foreign Exchange Market, where people buy and sell foreign currency.

Currencies are traded in pairs, for example Euro/US Dollar or US Dollar/Japanese Yen.

Foreign money held by a government to support its own currency.

Forex trading begins each day in Sydney, and moves around the globe as the business day begin in each financial center, first to Tokyo, London, and New York,. It's a 24-hour market, and investors can respond to currency fluctuations caused by economic, social and political events at the time they occur - day or night.

The Forex market is considered an over the counter (OTC) or interbank market, due to the fact that transactions are conducted between two counterparts over the telephone or via an electronic network.

8. Countertrade

Countertrade means exchanging goods or services which are paid for, in whole or part, with other goods or services, rather than with money.

Coburn Tool Corporation, an American manufacturer of large and small machine tools and parts, gears, valves, and bearings, was a major supplier to industries and companies world-wide. Because of crises in many of the countries in which Coburn did business.

A major market for Coburn is products had until recently been Brazil.

In the fall of 1984, however, a unique proposition was received at Coburn is head office near Cleveland, Ohio, from a Brazilian commodities broker.

CIC is offer was essentially this: in exchange for US $ 400000 in assarted gears, Coburn would receive the equivalent in Brazilian shoes, which it could sell in the American market.

 

Types of businesses

ADV:

Sole proprietorship	Partnership	Corporation
Easy to organize	Easy to organize, Decision can be made quickly	Limited liability, unlimited life
Decision can be made quickly	Profits are shared with only a few people	Ability to raise very large amounts of money
Owners receive all profits	The owners are responsible for success or failure of the business	Easy to ownership transfer

 

DIS ADV:

Unlimited liability	Liability is still unlimited	Complex forms must be filed with the state a federal government
limited life	Limited life	Profits are subject to double taxation
		A corporations owners do not directly control the business.

 

Types of securities.

Nowadays there are 5 main types of Securities market: Stock Market, Foreign Exchange Market, Government Securities Market, Derivatives Market, Futures Market. The main different between them is the type of financial instrument used.

There are 6 main financial instruments which people use most of all. It`s stocks, bonds, options and futures.

1) stock is a represent part of ownership of the company.

There are 2 types: common stock and preferred stock. Preferred stock they have dividend before the ownership of the common stock.    

Stockholders have one vote for each share of stock they own.         

2) A bond is a formal contract to repay borrowed money with interest at fixed intervals.
There are 2 types: state bond and corporate bond. State bond is more security, than corporate bond.

Corporate bond sometimes gives more interesting, than state bond.

Corporations can raise money by selling bonds, as as stocks. A bond is certificate that promises to pay the holder of a bond, the investor, a certain amount of money on a certain date.

   3) The 3`d one is option.

Option call and sell option

4) futures contract to buy or sell company assets or commodities at future date, but then the price fixed at the time.

5) subscription right
6) warrant

16. Mergers, takeovers & acquisitions.

The phrase mergers and acquisitions refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity.

In business, a takeover is the purchase of one company (the target) by another (the acquirer, or bidder).

Types of takeover

Friendly takeovers Before a bidder makes an offer for another company, it usually first informs the company's board of directors.

Hostile takeovers A takeover is considered " hostile" if the target company's board rejects the offer, but the bidder continues to pursue it, or the bidder makes the offer without informing the target company's board beforehand.

Merger

A merger occurs when one firm assumes all the assets and all the liabilities of another.

Pros of takeover: Increase in sales/revenues: Increase market share; Decrease competition (from the perspective of the acquiring company); Reduction of overcapacity in the industry; Increased efficiency as a result of corporate synergies/redundancies

Contras of takeover

Reduced competition and choice for consumers in oligopoly markets. Likelihood of job cuts.

Cultural integration/conflict with new management

Specific of small business

ADV:

Sole proprietorship	Partnership	Corporation
Easy to organize	Easy to organize, Decision can be made quickly	Limited liability, unlimited life
Decision can be made quickly	Profits are shared with only a few people	Ability to raise very large amounts of money
Owners receive all profits	The owners are responsible for success or failure of the business	Easy to ownership transfer

 

DIS ADV:

Unlimited liability	Liability is still unlimited	Complex forms must be filed with the state a federal government
limited life	Limited life	Profits are subject to double taxation
		A corporations owners do not directly control the business.

New product development

New product development that coordinates efforts across national markets leads to better products and services, but companies develop products in different countries in markedly different ways.

The introduction of the internet and intranets has the potential to accelerate the process of mining all markets for relevant information and features that can be included in new product.

Instead of building its own new products, a company can buy another company and its established brands. In the past years we have seen a dramatic flurry of one big company gobbling up another.

In recent years many comp have used “me-too” product strategies-introducing imitations of successful competing products.

Many companies turn to receiving one-successful brands that are now dead or dying.

International Trade: Export and Import

As we know the most important macroeconomic variables are export, import and trade balance. When we sell goods and services abroad it is export and we buy international goods and services for our country it is import.

When nations export more than they import they have a favorable balance of trade. When they import more than they export the unfavorable trade exists.

Some countries may exports and imports goods and services it is called visible trade and some countries which haven’t got resources may exports and imports services it is called invisible trade

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