What are the Advantages and Disadvantages of International Trade?
Introduction
If we get practical, knowing the advantages and disadvantages of international trade is "easy", in the end it is just another market strategy. Best Trading Mentor Elevate our company to a larger showcase? That may be one way of looking at it, but we must not forget that higher exposure also carries higher risk and higher costs.
This is where the key to success in
internationalization lies, knowing how to anticipate the advantages and disadvantages
of international trade.
Advantages of international trade
Improve our competitiveness
Betting on international trade enlarges the
limits of our market. One of the possibilities coupled with this
circumstance is the fact that we can count on providers and suppliers that
offer more competitive prices than those found in our local market.
Job generator
If we focus on the foreign companies with
which we will have to collaborate to carry out our internationalization
strategy, we can think that our collaboration will cause an increase in the
volume of work for these companies and, therefore, a theoretical increase
in employment. that they offer
Attraction
of new investors
If we have previously mentioned that
international trade means having a greater showcase, we must also understand
that this great showcase can attract new investors. Especially if, by making
use of new international agreements, we improve our competitiveness and
increase the value of our product.
Higher
efficiency, higher profits
If we manage to execute the three previous
points in a profitable way, it seems inevitable that we will improve the
competitiveness of our company and, therefore, profits will increase.
Disadvantages
of international trade
Costs
derived from licenses and other regulations
Crossing borders also means changing laws
and regulations on our products. The fact that we can find a cheaper
supplier on the other side of the world does not depend only on the cost that
it proposes (added to the added transport) being less than the cost that a
local supplier offers us. We must also take into account what the local
legislation says and what extra cost it can lead to our logistics chain.
Knowing how to anticipate these costs to
determine where the good business is and where the mistake can make the
difference between our internationalization strategy being successful or the
opposite.
Language can
be a trap
Thinking globally also means thinking that
there are many other languages in the world to communicate with. It is
true that English in the business world opens many doors today, but there are
times when not mastering the local language can end up becoming a
costly barrier.
This does not mean that you must be a
polyglot to obtain benefits from international trade, but it does mean that you
must take it into account and hire the services of a professional to help you
dodge the bullet.
patience is
key
You cannot bet on an international trading
strategy expecting to make a profit in a short period of time. Finding
partners, investors, suppliers, and, ultimately, adapting our logistics
chain to the new circumstances will take time. Knowing this is not
only necessary so that you arm yourself with patience, but so that you know how
to calculate and anticipate that window of time that will be necessary until
you get to obtain benefits and know how to cover yourself against it in the
best way.
In the same way, there are circumstances
that we cannot control, such as the scarcity of natural resources in a
territory or an unexpected price change in them. These unpredictable and
uncontrollable changes must be managed if necessary and will lead to an
increase in the window of time necessary to achieve profitability.
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