Question

can you plzz tell me what are the merits and demerits of trade?in business studies

Answer 1

Merits of International Trade.
1. It enables a country to obtain all those goods it cannot produce locally.
2. To promote good relationships among nations of the world.
3. It enables a country to purchase goods and services more cheaply than it can produce.
4. It gives a wider choice of commodities to the consumers i.e. consumers have a large variety of goods to choose from.
5. It encourages specialization among countries of the world.
6. It contributes to a better standard of living.
7. It earns the government foreign exchange that improves its balance of payment.
8. It helped a country to dispose of its surplus output.
9. It creates employment opportunity to the people of a country because people work or are employed in companies dealing with international transaction.
10. It boosts economic growth through imported capital goods used in manufacturing industries like machinery.

Demerits of International Trade.
1. Unwanted and harmful goods may be imported into a country.
2. It may create balance of payment deficit if a country imports more than it exports.
3. It threatens local infant industries through stiff competitions.
4. The supply of imports is not guaranteed, mostly during periods of emergency or political turmoil.
5. International price fluctuations mostly for agricultural commodities may earn the exporting country loss revenue.
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Answer 2

Here Are the Advantages of International Trade

1. It provides a foundation for international growth. 
Companies that are involved in exporting can achieve levels of growth that may not be possible if they only focus on their domestic markets. This allows brands and businesses an opportunity to achieve sustained revenues from a diversified portfolio of customers in several markets instead of a limited customer base in a single home market.

2. International trade improves financial performance. 
Brands and businesses which assert themselves in foreign trade work can increase their financial performance. This allows them to augment the returns they achieve on their investments into research and development. By rotating the products or services through the global market, the commercial lifespan of each opportunity can be amplified, expanding what existing products and services can provide. This benefit can even be achieved if a domestic market is no longer interested.

3. It spreads out the risk a brand and business must assume. 
Organizations can better protect themselves from risk thanks to international trade because of the amount of diversification that can be achieved. Whether it is a financial disaster, like the Great Recession of 2007-2009, or a natural disaster like Hurricane Katrina, a company with an international presence can survive and even maintain profitability without domestic customer support. A home market may be unstable, but international trade can still let the brand and business be stable.


4. International trade encourages market competitiveness. 
When a brand and business competes in several markets simultaneously, then it must focus on its competitiveness for it to be able to thrive. By observing a larger range of trends because of their greater level of global market access, brands and businesses can focus on quality, design, and product development improvements so that they can continuously improve and diversify.



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