Import or Export?

The corporate world has been expanding for the past millennium. During the earlier days, people only did business with their neighbors, then their neighboring town, the neighboring island, then the neighboring country, and now, any country is intertwined with the economic stability of any other country in the world. This expansion was made possible by trade.

Nowadays, a company, no matter what the size may be, is affected by the growth of the corporate world. Knowing this, a business should always try to grow and be competitive in order that it may cope with the rate of growth of the economy. In order to do this, a company should try its hand on trading with other firms outside the country.

In trading, choosing whether to import or export a good depends entirely on the world price, the domestic price and the comparative advantage of a country (home country of the company). The world price is the price of the product that prevails in the world market. The domestic price is the price by which a certain good is sold in the country. On the other hand the comparative advantage of a country is measured by the ability to produce a product at a lower opportunity cost than another country.

If the home country of a company has a domestic price lower than the world market, the company has a comparative advantage in producing the good (compared with other producers in other countries), and the company should export their product for a higher profit. On the other hand, if the domestic price is higher than the world price, other producers in other countries has the comparative advantage and the company should not bother to export its product. Trade has always been a good way by which a company augments its profit; however, this should be done with pre-analyses in order to be successful in trading.