Analyzing the Impact of International Trade: Import & Export Dynamics

This report provides a comprehensive analysis of import and export, crucial components of international trade. It explores the advantages, such as access to better technologies, improved living standards, and the ability to source goods and services at competitive prices, which are beneficial for businesses and countries. The report also outlines the disadvantages, including potential harm to domestic industries, foreign exchange losses, and the risk of unemployment. Furthermore, the document covers how businesses can engage in international trade and the key differences between service and merchandising companies, including how revenue is recognized and the format of financial statements. The report emphasizes the importance of understanding both the benefits and drawbacks to develop effective business strategies in a globalized market.

International trade is also
known as global trade where the
traders can exchange the goods
or services and raw material
across the borders. In the
competitive environment, there
are several businesses are
competing at global level.
While international trading, a
business can engage in either of
the two ways such as import or
export. As no business can self-
sustain by itself Exports
and Imports Are Necessary for
their functioning and growth.
Advantages or disadvantages
of import can help countries
or businesses to access best
technologies available and
best products and services in
the world and it’s also
improves standard of living
of people of that country
Cheap resourcing of products
can be possible through
Imports by globally
Procurement goods and
services.
If a product produced in one
country seems
attractive/useful to
entrepreneurs of other
economics, they can import it
and introduce it to their
potential consumers. It can be
done due to
internet expansion,
entrepreneurs can conduct
market research prior to
importing a certain product.
Another major benefit of
importing is the reduce in
manufacturing costs. Many
businesses today find
importing products, parts of
products and resources more
affordable than producing
them
Disadvantages of import
 Foreign Goods are
substituting domestic
goods so domestic
manufactures may lose
their business and this
may cause to total collapse
of local industry.
Tapping into New and International Market (Task -3)

 Foreign exchange loss to
country by importing
goods.
 Import will discourage
local manufacturing and
inflation may cause.
 unemployment may
increase.
Advantages of export
 While importing products
can help businesses reduce
costs, exporting products
can ensure increasing
sales and sales potential in
general. Businesses that
focus on exporting expand
their vision and markets
regionally, internationally
or even globally.
 Global Markets can be
captured so that country
will earn foreign
exchange.
 Exports Generate Huge
Employment
opportunities, it results
economy of Country will
be developed.
Disadvantages of Export:
 Exporting Depleting
resources like crude oil,
minerals, ores Countries
will lose valuable
resources which can never
be replenished.
 Export products are
subject to quality
standards any bad quality
products which are
exported will result in
Country reputation and
remarks on countries.
 Low Value Addition
Exports will be earning
less Foreign exchange.
 Various costs are incurred
by both merchandising and
service businesses. Both
may hire employees, both
may need equipment in
order to be in business and
both types of business
structures have customers
who pay for goods or
services.

Service company - A service
company uses its employees to
provide a service for the customer.
Here services are depending upon
human labour more than equipment
and only purchase a minimal
amount of assets.
Merchandising company - A
merchandising company purchases
inventory items to resell to
customers. The company buys from
several
vendors and provides a
central purchasing point
where customers can
purchase everything in one
stop.
Services are
transactions in which a
consumer benefits from
actions taken by the service
provider. Merchandise or
good trade are transactions
involving the transfer of
ownership of a tangible and
moveable object from a
seller to a buyer. Several
differences exist in the
accounting cycle between
service companies and
merchandising
companies. These include
recognition of revenue and
the format of the financial
statements. Service companies
recognize revenue when the
company performs the
service for the customer. In
most
cases, the company bills the
customer on a future date to
request payment.
Merchandising companies
generally collect payment
from customers when the
customer takes the
merchandise from the store.
The merchandising company
recognizes revenue on the
date of sale. The income
statement formats vary
between service companies
and merchandising
companies. The income
statement for the service
company subtracts the
operating expenses from the
revenues to arrive at net
income. The merchandising
company subtracts the cost
of merchandising from the
revenue to arrive at gross
profit. It then subtracts all
other operating expenses to
arrive at net income.