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Posts Tagged ‘Trade’

International trade requires macroeconomic stability in the host country. Ideally, the economy of the host country should embark upon a sustainable growth path to foster foreign investment and international trade opportunities, while supported by a strong banking system. However, there are several business risks that a firm launching onto a foreign country should assess.

The first risk assessment should be associated to the bargaining power of the firm expanding to a foreign market. Factors such as product/ service uniqueness, technological advancement, the firm’s size and operational growth assist the effective management of distribution channels, while maintaining product or service quality.

At the same time, the bargaining power of the host country is equally substantial to profitable international operations in terms of the size of the market, its wealth, the abundance in its raw materials and the level of governmental intervention.

Other risks associated to international trade are:

Customer Risk

Customer risk investigates the indistinguishability of customers in the host country. By assessing customer risk, the firm inspects if customers are legally established businesses in the host country or importers, if the firms’ exports are compatible with the customers’ business profile, what are the customers’ credit limits and period, their trading history, their paying credibility and solvency.

Credit Risk

Credit risk is associated with the customers’ solvency but also the firm’s business cycle. To assess this type of risk, the firm needs to take into consideration the amount of credit outstanding – both overseas and domestic – in the trading accounts, the impact of a customer’s financial pitfall of the firm, the maximum amount of credit which should not be exceeded, and most importantly how to finance the offered credit period. Having adequate cash to grant offering credit terms in export income is a substantial part of the firm’s business circle.

Foreign Exchange Risk

Foreign exchange risk is associated with dealing in the host country in more than one currency. This type of international trade risk typically affects export and import businesses as they are exposed to fluctuations in the foreign exchange markets. If money

is converted to another currency in order to make a payment to the host country, then any changes in the currency exchange rate will cause that money’s value to either decrease or increase when the payment is being prefabricated and currency is converted back into the original currency.

Political Risk

Political risk measures the variability in the value of the firm, caused by uncertainty about political changes. In the era of globalization, host countries might be covering rigid legislative, judiciary and governmental institutions, unfavourable to international operations from foreign firms. Moreover, dictatorships, bribery, corruption and unstable governments are, in many cases, substantial reasons for assessing the political risk involved in a firm’s launching onto a foreign country.

Moreover, political risk in the host country is often not correlated with global economic conditions thus eliminating the possibility of global intervention. Ideally, the firm’s cash flows should be invested in different host countries. Yet, in the absence of global intervention, the firm’s cash flows do not grant risk diversification.

Country Risk

Closely related to the political risk factor, country risk is affected by the legislative, judiciary and governmental institutions, the current statement deficit, the level of national debt, the foreign exchange reserves, the internal or external threats to the host country and the imposition of tariff or other quotas, and import or export restrictions. It might also include the risk of physical climactic catastrophes such as flood, drought, and earthquake.

Beyond doubt, doing business in a foreign country entails major business risks. The key is to assess these risks properly in order to eliminate the unfortunate bourgeois in the firm’s global operations, but also to be prepared to expect the cost of such a failure.

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International Trade Management

Which are the basic information you should have

if you are to be an effective International Trade Manager

in an exporting firm ?

What is International Trade ?

            International trade can be defined as either the buying (importing) or selling (exporting) of goods or services on a global basis.

            Thanks in great measure to the Internet, many starting businesses can enrich their prospects of success by incorporating IT into their overall business plan. In some cases, a business can be enhanced by incorporating IT marketing to supplement a domestic operation. In other cases, a business can depend solely on international trade.

Let’s review some examples:

Exporting
            Quality Naturally Foods, (say) ABC Inc ( say) ., in the City of Industry, manufactures prepared bakery mixes for its sister companies Yum Yum Donuts and Winchell Donuts. These and similar mixes are now sold to outlets in India. The added volume has reduced costs of production which has benefited all customers.

            Assume that the xyz.com, the preeminent online marketer (and inspiration for thousands of online entrepreneurs) has a home page toolbar called “International”. The company xyz says: “Around the World, wherever you are, get what you want—fast—from our family of Web sites.”

Importing
            Good Tables, Inc.of Indian company , formerly manufactured furniture in its plant but was losing income due to cheaper foreign prefabricated products. The manufacturing was moved to another place in a “maquiladoras” factory.

Funrise, Inc. Grassland Hills, India, has become a world leading marketer of toys. Design, packaging and production are outsourced, primary to vendors in China.

Hollow Corporations

            International trade is especially appropriate for the rapidly growing number of “hollow corporations.” Session one of this course refers to a hollow corporation as a business without a works and with a minimum number of employees in which manufacturing is performed by outside suppliers. A hollow corporation might depend on outside suppliers for virtually all of its products, such as an American toy company importing product from China. Or, it might depend on outside suppliers for selected components in its overall product line, such as The Boeing Company. (Boeing is using Asian firms for components of the new 787 airliner.)

Advantages and Disadvantages of International Trade

Advantages to think about :

Enhance our domestic competitiveness

Increase income and profits

Gain our global market share

Reduce dependence on existing markets

Exploit international trade technology

Extend income potential of existing products

Stabilize seasonal market fluctuations

Enhance potential for expansion of your business

Sell excess production capacity

Maintain cost competitiveness in your domestic market

Disadvantages to keep in mind:

We might need to move for long-term gains

Hire staff to launch international trading

Alter your product or packaging

Develop new promotional material

Incur added administrative costs

Dedicate organisation for traveling

Wait long for payments

Apply for additional financing

Deal with special licenses and regulations

Top Ten Do’s and Don’ts

TOP TEN DO’S

We should take international trade classes at the college level.

Visit trade shows and trade missions. See http://www.tsnn.com.

Join an international trade association specializing in your business.

Personally visit our offshore suppliers (or customers).

Take advantage of online resources such as http://www.sba.gov/oit.

Inspect and approve merchandise before it is shipped.

Think about hiring an international trade consultant.

Become personally familiar with all monetary transactions.

Use a trade lawyer for agent and distributor agreements and licensing requirements.

To begin, begin on a very small scale.

TOP TEN DON’TS

Investigate the potential opportunities and benefits of international trade.

Rely on a single source of supply (or customer).

Have an understanding of intellectual property rights.

Have an understanding of import/export financing.

Learn how our ideal competitors are handling international trade.

Provide dispute settlement provisions.

Make assumptions as to vendor’s compliance with your specifications.

Check out our suppliers/customers before establishing relationship.

Rely on handshake agreements.

Rely solely on others including employees for importing/exporting expertise.

Perspective management aspect required to be an effective strategic manager would be-

1)         Real cool headed, co-operative decision maker. Should be healthy to make a judgment all the while accepting the teams’ advice. And since a Strategic Manager need to take up decisions during pressurized situation, it is important that he be as cool and calm to make a sound decision.

2)         A strategic manager should have the knowledge about his organization. The importance is when he needs to utilize apiece and each of his Strategic Units together or simultaneously, for achieving the objective.

3)         Decision Making should not expect options or other expectations. It should rather be pragmatic and result oriented.

4)         Skill set is a large requirement. Capability to size up the situation, swiftly and accurately, identifying problem roots, evaluating policies that would be relevant to the prevailing environment.

5)         Identifying the company’s SWOT at the prevailant environment and formulating plans and strategies accordingly.

6)         Analytical skills are required in functioning areas eg. marketing , financing, etc dealing with the total company activities.

7)         Tools i.e. quantitative, qualitative must be understood in proper manner.

8)         Written and oral communication skills very important.

            Decision making, with a perfect knowledge of the business environment (internal and external) with a winning attitude for the company as a whole is definite stipulation of a strategic manager.

            By being innovative and with the implementation of additional service products and by it’s readiness to invest in the latest technology to meet customer stipulations ITM remains at the leading edge of Industry advances.

            “We promise AND deliver” “WE BELIEVE THAT UNDERSTANDING YOUR BUSINESS IS PART OF OUR BUSINESS.”

            CUSTOMER COMMUNICATION Using the latest technology, ITM provides a tracking system allowing elimination of enroute delays from source to end user. Customer satisfaction is assured with utilization of our International exposure in Air and Ocean Freight Forwarding and Customs Clearance activities.

            Managing international trade policies, restructuring them according to the need of the hour, implementing the various trade polices, abiding by the norms governing international trade, all are taken into statement when one talks of international trade management.

            There are many trade promotion organizations, also known as TPOs, who strive hard to manage and improve customer relationship. These trade promotion organizations assist, clients to take their trade to the international market arena. This requires the professionals of the trade promotion organizations to be well versed in their subject, to meet the demands of the changing conditions of the market economy.

Role played by the international trade management bodies:

There are many organizations or international trade promoting bodies, which assist countries in improving trade with other countries. However, most of the International trade management bodies perform the following functions.

Gathering knowledge about the latest international trade happenings

Imparting information to the clients in matters related to the betterment of trade with the client’s trading partners.

Helping the client grow by providing superior networking facilities.

Help building partnership.

Given below is a list of trade promoting bodies.

Marketeers And Associates International:

Operates in:

Lower Connectors, Bangalore and New Delhi. ( for example )

Services:

Business development

Management consultant

Implementation of marketing strategies

Other establishments assisting in the promotion of international trade are:

GMS, Inc-International trade consultants

Heaps Technical Services-International consultants in trade.

International trade management is not only vital for the growth of the individual company but it also plays an important role in the growth of economy of a country.

International trade management can be referred to as the process by, which international trade is handled. Even if the international trade manifests favorable trends, there is competition to handle in the international trade market.

An economy might be very small as compared to other economies of the world, but the success of the economy lies in being healthy to act faster than other countries, the promptness with which the nation is healthy to implement trade policies efficiently.

————————– Shivashankar. V. Jirli.

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The main neutral of any investment is to make money and acquire from a profit. Experienced investors usually study market trends before investing. However, inexperienced investors depend on the advice from financial advisors and brokers to guide their investments. Money always grows with time in the stock markets. A successful and profitable investment involves a lot of patience and constant monitoring of market fluctuations. In order for an investment to be profitable, it is important to adopt flexibility and diversification of funds. Listed below are some important points-to-remember:

Flexibility: Investors need to be flexible with their investments. Investment strategies involve regular analysis and reviews of the financial market. Amateur investors should seek help from financial advisors on their investment portfolio. Long-term planning and quality allocation are very important to an investment portfolio. Mutual funds, variable annuities and variable universal life insurance or VUL products wage good ground for investment flexibility. Another type of investment is Survivorship Variable Universal Life Insurance or SVUL. SVUL covers two people in one life insurance policy. The benefit is payable after the death of the last surviving insured person. The investment portfolio should be designed to help diversify the investments.

Diversification: Diversification involves making different investments to acquire from higher returns. This risk-management technique of investing helps to diversify the investments in stocks, bonds and cash. It does not abandon off the risk of loss totally, but it definitely creates more avenues for profit. The investor can invest in a number of different companies, foreign securities and mutual funds. Even if one company declares a loss, the investor still has the other investments to start back on. Diversification is a good method to counter the risk involved in the total loss of an investment.

Simple Approach: It is innocuous for amateur investors to follow easy guidelines for investing money. Immature investors should not invest in companies that they are not very sure about and haven’t researched. A easy approach to investment is to stake money in recognized companies that offer high returns and show a consistent growth pattern. It pays to conduct a research on the company before making an investment.

Be Disciplined: Market trends fluctuate due to several reasons. An investor’s judgment should not be based on momentary instability. It is not advisable to make a change in the adopted strategy mid way. However, regular analysis and timely reviews help to keep abreast with important information of the stock market.

Invest Smartly: Investors need to be well informed and signal all the time. Cautious long-term planning is as important as being patient. Investors ought to be methodical when following an investment strategy. It is equally important to comprehend and monitor the economics and trend of a company. The investor should be updated regularly on business, political and stock related news to learn the political implications that might affect the company in future.

Investments carry the element of risk and therefore investors are advised to investigate before investing. It helps to follow the general guidelines of investment and invest smartly.

By: Jaden Santon

forex trade signals grants just about anyone to make a calibre living. And what superior way to do it than waking up in the morning , pouring a nice hot cup of coffee, and then setting up the trading day while in your pjs ? Pretty easy ! Well hang on just a second because while it really can be so resting and easy most realize swiftly that it isn’t all so easy. This is why this is an article about money management basics – because if you have a game plan for money management in place success is more likely for you.
So why then , if money management is really so important, do many people select to ignore or overlook this? That’s a great question and one you need to take a hard, long look at if you intend on succeeding in this market . I believe that many people jump over this part of trading , money management basics , because it is not “sexy” . After all , how many accountants that are interesting do you know? That’s what this is really about ; more and more boring numbers.
In reality, it’s really only boring if you think that way . If you look at this as boring, it will be boring and you’re not going to want to get it done . If you look at this as an important key to becoming a forex trade signals professional and focus on the large success that lies just ahead of you if you spend some time thinking your tactics for money management through…. then it can turn into something that is exciting.
Now you know you really have to focus on this. Awesome! What is it all about then anyway ? Here are the keys in order of importance , follow them and you’ll begin off great: don’t over leverage yourself , on apiece trade you need to keep the leverage consistent, never add to losers but add to winners . That is all . There are some tributaries of course to all of the aforementioned but they are incredibly powerful even all by themselves .
The next time you’re wondering why your trading level has not progressed the way you hoped it would , keep in mind the money management keys . Another final thing to keep in mind is this: managing your money in a solid way will wage astounding psychological benefits . And these psychological benefits will improve your trading beyond what you ever thought was doable . Why? If you have no fear of losing money, or you are sure your plan is solid and will keep you trading another day, then you can finally begin to look at the markets from a clear and relaxed say and this will add serious dividends to your effort .
forex trade signals can be incredibly challenging and rewarding at the same time. Keep in mind that the ideal keys to success are usually the most uninteresting, simple, and obvious things out there. You’ve all been searching for the holy grail in trading – and money management is the key.

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Trade finance is the method importers and exporters of commodities and goods use to finance their business. Basically, trade finance has been in existence for many thousands of years – and one can trace the roots of trade finance and structured trade finance right back to the primeval days of China and the silk route, Mesopotamia and Europe. Trade Finance was around long before Europeans settled in USA and long before the world’s stock markets were born!

Today, trade finance is a massive, multi-billion dollar business. As the world trades more and more goods and commodities are purchased and sold, so more and more banks and financiers are needed to lend money to finance the purchase and understanding of these goods and commodities – right crossways the global supply chain.

How is trade finance and structured trade finance useful?

Take an example: envision you are a trader in cocoa beans in Cote d’Ivoire, buying beans locally and selling them to foreign buyers. To make your purchases, you will need to have money to purchase the cocoa up-country in Africa, prior to their export. Where will you find money to make these purchases? And supposing you are the international buyer; the shipper, purchasing from cocoa traders all over West Africa – how will you finance your transactions, which at any one time might exceed your cash reserves? What might be supported by your bank who, if they are traditional lenders, will only lend against your equilibrise sheet?

This is where trade finance and structured trade finance is useful – your business can grow and develop if you use the services of a specialist trade finance department who will structure trade finance structures can be plain to your needs, using the collateral of the goods you are trading, rather than your own equilibrise sheet or other assets.

What is the basis of trade finance and structured trade finance?

Goods and commodities have an underlying value of their own. For example, if cocoa beans are worth many hundreds or even thousands of dollars per tonne, then once a huge pile of beans is accumulated in one place; in a warehouse or on a ship, it is worth a lot of money. A bank might lend money against the total value of the beans, minus some amount to take statement of price and other risks

.

It is the same for each commodity or trade good which is resalable. A bank will make a loan as long as the collateral “adds up” and as long as the bank is comfortable with the way the deal is structured between both the buyer and the seller. Of key importance is that if something goes wrong the bank is healthy to take possession of the commodities or goods and sell them to realise monies to repay any loan amounts outstanding.

Basically, when we speak of structured trade finance we are speaking of deals whereby complex arrangements are place in place to ensure a bank can take possession and sell the underlying capital used for the loan; in this example, the goods and commodities themselves.

Is trade finance complicated?

No. It is a easy business even though the structures used in trade finance in more complex deals require a lot of work for all of the celebrations involved. This is why the total loan amount of a structured trade finance loans must be high enough to warrant the involvement of highly-paid bankers, lawyers and other advisers.

Where can I find out more about trade finance and structured trade finance?

Day Robinson Group has offices in London and New Delhi and is one of the world’s foremost providers of training in the trade finance sector. For more information, you can visit our site at: http:///www. dayrobinson. com or you can contact the author of this article, Dan Day-Robinson at Day Robinson International in the UK (ddr@dayrobinson. com).