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International Trade Logistics Assignment

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Added on  2020-05-28

International Trade Logistics Assignment

   Added on 2020-05-28

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RUNNING HEAD: International Trade LogisticsInternational TradeLogistics
International Trade Logistics Assignment_1
International Trade Logistics 1ContentsQuestion 1........................................................................................................................................2Question 2........................................................................................................................................3Question 3........................................................................................................................................4Question 4........................................................................................................................................5References........................................................................................................................................6
International Trade Logistics Assignment_2
International Trade Logistics 2Question 1. What possible risk management strategies can an exporter/importer follow? Explaineach strategy’s advantages and disadvantages from the perspective of a small exporter.Answer- The adoption of risk management strategy provides organized and rational approach to recognize, evaluate and manage risk (DIY Committee Guide, 2018). The companies that participate in the international trade can effectively manage risk through the adoption of appropriate risk management strategy. The risk management strategies followed by importer/exporter are in three forms-Retention of risksTransferring the risk altogether to the insurance companyAdoption of mixed approach that combines retention and transfer of risksRisk Retention- It is a strategy for risk management in which decision is made regarding the retention of risk and not insuring against it. Risk retention is often chosen by the small exporter as they have very little exposure. Their shipments involve goods of lower value which, if results in loss, will have only few financial consequences. Moreover, the international transactions constitute only a minor percentage of their business. Therefore, the adoption of risk retention is beneficial from the perspective of a small exporter. On the other hand, it contains the relative disadvantages for a small exporter too. For small exporters, risk retention can often result in hugelosses due to underestimation of risk which may ultimately result in ending up of their businesses. Risk Transfer- Risk transfer is a risk management strategy which is adopted by various firms in order to transfer the risks associated with international transportation to an insurance company. The protection against the losses is provided by the insurance companies in exchange of a premium. Risk transfer proof to be advantageous for a small exporter as small exporters are uncomfortable with the risks associated with the international trade. The proper assessment for the exposure of such risks is a difficult task for small exporters since they lack understanding in international trade. The transfer of risks to the insurance company therefore protects their goods against different kinds of losses. On the other hand, risk transfer requires the payment of premium which may become a heavy burden for the small exporters for whom the premium may exceed the value of goods being exported. The risk cover may not result in beneficial project.
International Trade Logistics Assignment_3

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