Module 4
Importing, Exporting and
International Trade
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Introduction
• Individuals, companies, and countries participate
in international trade by importing and exporting
goods and services.
• International trade opens new markets for
companies from many nations and provides
access to products some people would otherwise
never use.
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What Is International Trade?
International trade can take place between one
nation and another.
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What Is International Trade?
Business Activities in
International Trade
Buying
Paperwork
Selling
Granting Credit
Shipping
Making Payments
Receiving
Servicing Products
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Importing and Exporting
Imports
Needs are met by
imports
Business
Exports
Extra products and
supplies are
exported
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The Nature of International Trade
• The WTO stands for the World Trade Organization.
• This is an organization in which many countries belong
to for trade relations.
• The EU stands for the European Union.
• Many countries also belong to this group for special
trade considerations.
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Imports
Imports
• Can come from foreign companies or
foreign governments and individuals.
• Imports goods and services that people in
one country buy from people in another
country
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Exports
Exports can go to foreign companies or
foreign governments and individuals.
• Exports goods and services that people in
one country sell to people in another
country
•
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Goods and Services
• When a good is imported or exported, a method of
transportation must be chosen to move the item across
national boundaries.
• A good is a tangible item that is made, manufactured, or
grown
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Goods and Services
•
A company must pay shipping costs in order to
transport goods.
•
Companies must agree to insure or pay for damaged
or missing goods.
•
There must be a procedure for returning goods.
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Goods and Services
Channel of Distribution
Producer
Middleman
Company
Customer
Merchant
Middleman
or
Agent
Middleman
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Services
• Selling a service usually involves convincing the
customer of the benefits of the particular service.
• Service is an intangible benefit or task provided
by a business to its customers
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Services
•
Individual consumers purchase services such as
hospitality and tourism.
•
Companies purchase services such as consulting,
insurance programs, and banking and financial
services.
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Services
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Importing Process
1
2
Identify
need
Search for
suppliers
3
Create and
finalize a
purchase
agreement
4
5
Receive
goods
Confirm
the
purchase
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Identify Need
• An individual customer, a company, or a government
can have a need.
• A need can be for a good or a service.
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Search for Suppliers
The Internet makes the search for suppliers easy because
there are so many choices.
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Create and Finalize Purchase
Agreement
A purchase agreement is a contract between the buyer and
the seller.
Items in a Purchase Agreement
Items
Involved
Delivery
method
Exchange
Rate
Price
Due
Date
Who pays
for shipping
Provisions
for damage
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Create and Finalize Purchase
Agreement
International trade documentation refers to the papers and
documents that companies must send to customers with
their products to legally export or import goods.
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Receive Goods
•
Goods are usually received at a shipping dock or a
company’s front door.
•
Goods need to be checked.
•
As goods pass across national borders, companies may
owe a tax or duty.
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Confirm the Purchase
The importing company confirms the purchase and makes
payment when it agrees that the terms of the contract
have been met.
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Confirm the Purchase
Relate What imported products do you buy
and use? What countries export those
products?
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Exporting Process
1
Assess
Demand
2
3
4
5
Identify
potential
customers
and make
sales
contacts
Create and
finalize a
purchase
agreement
Deliver the
goods or
services
Complete
the
transaction
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Assess Demand
The two steps in assessing demand are:
• Analyze the export potential for a good or service.
• Assess the company’s ability to follow through and
provide the good or service.
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Identify Customers and Make Contacts
Ways to identify customers and make contacts include:
Trade Shows
E-mails
Visits by Salespeople
Teleconferences
Telephone Calls
Internet Solicitations
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Create and Finalize Purchase
Agreement***
• Most shipping terms are FOB.
• FOB- (free on board or freight on board) signifies that
the ownership of merchandise in transit determines if
freight charges are free
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Create and Finalize Purchase
Agreement
• CIF is another term used in a purchase agreement.
• CIF - (cost, insurance, and freight) the price quoted to
the buyer, including cost, insurance, and freight
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Deliver Goods and Services
• The seller must arrange to transport the goods to the
buyers location.
• The seller must comply with all legal and accounting
requirements.
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Deliver Goods and Services
• Many goods require a certificate of origin.
• A bill of landing (BL) identifies exactly what is being
shipped.
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Complete the Transaction
• The transaction is completed when the buyer and seller
agree all terms are met and payment is made.
• Many countries rely on the International Monetary Fund
(IMF) to settle exchange rate problems.
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Complete the Transaction
• The World Bank Group can lend money to support an
international trade relationship.
• The International Development Association (IDA) helps
companies in less-developed nations.
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Thank you for listening!
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