International Business factor

1439 WordsApr 18, 20146 Pages
Since the Second World War, international business appeared as the main economic factor responding to postwar needs. Nowadays, globalisation has increased the facility of international exchange and has risen the multicultural needs.The increase in demand for international products has resulted in large possibilities to do business abroad. However, it is really complicate to import or export without knowledge in this area. Global business is all of the commercial exchanges which involve more than one country. Understanding and applying the major factors of overseas business is crucial. In fact, it is clear that the most important factors involved in international exchange include foreign culture, transport and payment transaction. This…show more content…
Dr. Nelson (2009, pp.121-2) agrees that air shipment is the fastest way of delivery; however, it is the most expensive transportation. Freight by sea is more cost efficient and more convenient for bulk and heavy products but it takes longer to transfer. (Nelson, 2009, pp.121-2 and Weiss, 2008, pp.143-p7). Finally, after finding the most suitable transport to distribute the merchandise, organisations need to establish the incoterms to do international business. Radke (2012) describes that incoterms intended to regulate, define the cost, reduce transfer of risk and also avoid misinterpretation of freighting selling goods contract. He explains that there are 11 incoterms with different insurances, including various covers for the risk of goods damage or loss. Hence, incoterms are crucial if an incident happen when the goods are in transit and to determine who is responsible for the cargo among of the seller and the buyer. For instance, The International Chamber of Commerce(2010, pp. 60-7) explains that the incoterm Delivered Duty Paid (DDP) is all seller 's obligations, from “door to door”. In other terms, the seller is responsible/for packaging, insurance, taxes, duties and any potential hazards (ICC, 2010, pp. 60-7). Those factors show the importance for an importer or an exporter to send their product with the best transport method and anticipate the contractor 's responsibilities. Moreover, these points are essential part of doing overseas
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