International Business

Chapter 4: Importing, Exporting, and International Trade

Chapter Summaries

• The processes of international trade include activities such as buying, selling, shipping, receiving, paperwork, granting credit, making payments, servicing products, and a wide variety of additional tasks.
• A good is a tangible item that is made, manufactured, or grown. A service is an intangible benefit provided by a company to individual customers, other companies, and governmental organizations.
• Importing involves identifying the need, searching for suppliers, creating and finalizing the purchase agreement, receiving the goods and confirming the purchase is complete. Exporting involves assessing the demand, identifying customers and making sales contacts, creating and finalizing a purchase agreement, delivering the goods and services, and completing the transaction.
• Companies and countries trade with each other for a variety of reasons that include earning profits, adding unsaturated markets, and smoothing out seasonal sales.
• It is important for countries to maintain a balance of trade because most economists believe that a negative balance of trade, or a trade deficit, is bad for a nation's economy.
• International trade organizations play many roles such as helping to expand international trade and raise the standard of living in the participating countries.