What do you understand by exporting and importing ? Mention its advantages and limitations

international-trade
cbse

#1

Selling of goods and services from the home country to a foreign country is known as exporting while buying of goods and services and bringing them into one’s home country is known as importing. The import and export of goods can be done either directly or indirectly. When the firm itself approaches the overseas buyers or sellers and performs all the formalities related to import and export of goods, it is referred to as direct importing or exporting. When the firm’s participation in the import and export operations is minimum and most of the formalities are carried out by some middlemen, it is referred to as indirect exporting or importing. In this case, firms don’t directly deal with the overseas customers.
Advantages:
(1) Easy way : Importing/exporting is the easiest and
least complex way.
(2) Less investment : Exporting and importing does
not require as much investment for carrying out business operations.
(3) Low risk : The risk is low in importing and exporting as compared to other modes of entry
, into international business.
Limitations:
(1) Increased cost of product, additional packaging, transportation and insurance cost are incurred in transferring the goods.