Businesses prefer importing and exporting because it is cheaper. It can be easier for a business to switch from one country to another because it only has to deal with one currency, which means that the exchange rate for each item is constant.
Why Business Prefer Importing And Exporting? By importing, a business can have control of the products that it buys. It will only have to focus on the selling process once it has built up its stock, while by exporting a business usually has to build up stocks in the country that it is exporting from.
A business can make larger profits when it imports goods. By importing the goods, it does not have to compete with other importers, who will often buy goods for low prices and try to sell them for higher prices. A business that does this is called a middleman.
This leads businesses to believe that sourcing products from close countries will be cheaper than buying them abroad, when in fact this is not always true. Some countries may already have a trade surplus or go into debt with other countries, which means they are less expensive. This can lead to businesses importing goods at a lower cost than they would have been if they had used domestic sources.
The Bigger Picture
Some people believe that because it is cheaper to import and export goods, this is always the best option. For example, a business may believe that it will be more expensive for it to buy a machine from a local supplier than from China, so it opts for the cheaper choice. However, the business does not know what other things are affecting its costs.
It does not know if there will be a change in currency rate or if transport costs are rising. The business may choose to source these other factors into its prices of both imported and exported products through research data. This is known as the Bigger Picture, where it can show the whole scale of your product.
The Shorter Term
The Short Term Option refers to a short-term period, which lasts for less than a year. It means that businesses must choose whether to import or export goods in this short term period. It provides a quick method for businesses to make decisions about their products, and it may be more cost efficient because businesses will not have to continually buy and sell products or storage assets, but they will only have to do this if they decide to import or export goods. However, if the business decides to export, it will have to pay for transportation fees and storage fees.
The Long Term Option
The Long Term Option is a plan that a business keeps in mind for longer than a year. It looks at import and export through the whole supply chain but does not provide enough information to make a decision about imports or exports.
It gives an overview of how importing and exporting products can affect prices and profits when there are various other factors that affect prices, such as exchange rates, transport costs and storage costs. When businesses make decisions with regards to import or exports they need to look at these other factors further down the line.
The Three Wise Monkeys
The Three Wise Monkeys is a system that is designed to help businesses when they decide whether to import or export. This system consists of three people or monkeys who represent the customer, supplier and manager of a business.
They can be used in the decision-making process by looking at how importing and exporting products can affect prices, profits and quality. The results from this system will help businesses make sure that they do not get carried away with their decisions about importing and exporting goods.
Conclusion :
In conclusion, businesses prefer importing and exporting because it is cheaper. It can be easier for a business to switch from one country to another because it only has to deal with one currency, which means that the exchange rate for each item is constant.
