Assignment Sample on U26207 International Business
Introduction
International business is associated with the business areas that are focused on doing business from the international perspective. These areas are the role of finance, market knowledge and analysis, supply chain management and finding resources either tangible or intangible. The factors that can affect the natural selection of the resources and doing business to establish a faster and more profitable business are certain important terms and conditions that must be taken into account. In this report, the illustration on those aspects such as INCOTERMS and types of contracts are going to be illustrated.
Section 1: INCOTERMS
In order to clear out the ideas of doing business internationally, there is a certain depth is required in the business conduction module and terms. Consideration on the factors that can affect the business growth along with providing the proper insights on the environmental aspects of the market and demands of the regions and customers organizations such as ICC (International Chamber of Commerce) are taking certain measures that can be proven beneficial for all the members associated with the business structure (Liao et al. 2018). In the view of facilitating the private sectors to the new market scenarios and giving them opportunities to know the demands and take appropriate measures within the organization as per the requirement, it is essential to understand their prime motives of the first (SOGA, 2021). After knowing the objectives and analogous to the situation the establishment of certain rules, structures and conceptual interpretation is presented as in this case INCOTERMS.
Brief on INCOTERMS
It is required to do business around the world for the business firms, especially the private firms, in order to expand their profit margin and increase productivity. Considering these basic aspects along with other factors taking into discretion, the International Chamber of Commerce (ICC) has introduced certain terms known as International Commercial Terms in abbreviation INCOTERMS (Yaakub et al. 2018). These are certain rules and statements that are used by business firms to trade internationally for their goods and services. It helps in clarifying the ideas of the business firms more especially clears out the confusion during business between buyers and sellers.
There are many factors associated with these terms of which the most recognized cases like transportation and trading are emphasized in them. This is done to clear out the perception and understanding among the stakeholders, business firms, employees and customers to know the objectives of a particular organization and cater information about them (Petrová, Krügerová, & Kozieł, 2021). It can provide elaboration on the aspects to showcase the proper interest to showcase the goods and services as per the market condition. INCOTERMS can provide proper concepts on the trade agreements and terms in the foraging lands and it covers almost all the renowned regions around the world.
The information provided in the INCOTERMS is considered as the global context due to ICC is associated with 45M members of more than 100 countries. The objective of these terms and conditions to introduce in the global market context to do business is to settle disputes and provide a friendly environment to do business with the association of the local resources either physical or mental (Unal & Metin, 2021). INCOTERMS was introduced for the first time in the year 1936 by ICC and since then the authorities have been making changes to the policies and terms associated with INCOTERMS (SURARAKSA, AMCHANG & SAWATWONG, 2020). This is because the market is ever-changing and it cannot be predicted exactly what awaits in the future. Thus, to take appropriate measures and prevent unforeseen circumstances for the business firms that can provide sufficient output to the global economy these factors become an important topic.
Benefits and Uses of INCOTERMS
An increase in the number of firms around the world by the expansion of the business is considered as an essential factor. In this way, the entire world economy gets connected and an environment of growth in a collective manner can be achieved. It can benefit in lots of aspects and some of them are an increase in the number of job opportunities that can help the society to come to a stable position (Matvieiev et al. 2021). Along with that, the per capita income of a particular region increases due to the globalization perspective of doing business. It helps to create the mutual understanding among the firms to do business thus collective increment can be found at the end of every financial year and many other things can be included in the outcomes of the effectiveness of INCOTERMS.
Among many things, there are certain financial aspects of the implementation of INCOTERMS. These aspects include the filling of financial order of purchases, labelling the shipments for the transportation purpose, filing the original certificate or documenting FCA which is Free Career Agreement.
Rules associated with INCOTERMS
There are certain rules associated with the INCOTERMS introduced to obtain an optimized platform for doing business, trading and transportation of goods and services. Some of them are DAT (Delivered at Terminal), DDP (Delivered Duty Paid), EXW (Ex-Works) (Davis & Vogt, 2021). In the case of DAT, the seller gets concerned about the risks associated with delivering the goods at the right terminals for further allocation of the supply and after reaching the terminal the buyers consider the risks with the transportation costs and other surcharges associated to allocate the products at the final destination. In DDP, sellers are concerned with the duties that are paid at the reserving centers, ports and other places that must be paid to obtain an uninterrupted supply chain management (Liao et al. 2018). In the Ex-Works the sole consideration is barred by the buyers while the sellers are only concerned about the allocation of the supplies.
Effective consideration in case of the allocation of duties and mitigating them in a proper manner that can benefit both the business firms and purchasers are the basic considerations of the implementation of these rules (Yaakub et al. 2018). Thus, INCOTERMS not only gives a clear insight into doing business globally but also provides the opportunities to cater knowledge of the market scenarios around the world.
Section 2: Contract type
Contract plays a significant role in the success of any business organization. It is one of the most important key components of any business which saves a company or business organization from any kinds of legal problems faced by the company. It is one of the most important legal agreements done between many parties which are associated with any business. It plays a crucial role when a business faces a difficult situation with its clients and investors. International contracts are defined as legal agreements done among different parties which have a significant role in the business (Wardani & Afriansyah, 2020). The contract has a significant role in facilitating international business. There are many kinds of contracts occurring among different parties in international business which includes, international sale contracts, international supply contracts, international distribution contract, international strategic alliance contract, international service contracts, and international manufacturing contracts
Importance of international sale contracts
International sales contracts have a significant role in the success and facilities of international business. It plays a crucial role in setting a business relationship between two different nations. It is one of the most significant increasing trade agreements among different nations. It is one of the most important elements in maintaining a good relation among different nations in their export and imports. Healthy exports and imports have a significant role in the business organization as well as in the economic activities of any country (Nishida et al. 2021). Contracts of international trades between two nations are done based on duties, trade tariffs, rights, and obligations among different products or services. Different parties associated with the international sales contacts may be importers sellers’ exporters or buyers. It has a significant role in the business done among different nations. No country in the world is self-sufficient so a country must buy different products from other countries which can produce them. International sales contracts engaged with several products, prices of products, conditions of payments of products prices, and delivery time of different products.
Description of goods
It is one of the most important sales contracts or agreements are done between two nations. These kinds of contracts are necessary to satisfy buyers which have a precise description of different kinds of products or goods. It is one of the most important agreements in different nations in maintaining the satisfaction of buyers in any kind of commercial purpose.
Delivery terms and conditions
Delivery terms and conditions are necessary for the company in maintaining proper legal agreements between sellers and buyers. As per the opinion of Nyarko (2019), delivery terms and conditions are one of the most important roles in the business of any organization in their success in business. Contracts related to delivery terms and conditions described different kinds of risk points in the trades, administrative and transportation costs of products, and duties of customs and ports.
Price
The price of different products or items is also necessary for the company to maintain the different kinds of agreements between two international parties. It has a significant role in satisfaction and maintaining a healthy business relationship among different parties. Prices are considered as one of the determinants factors in international exports and imports. Explanation of prices of different products in any parties is also necessary for the parties if they fail to indicate proper prices of products or items.
Role of international supply contracts
International supply contracts have a significant role in the business of any organization. The contract among different suppliers who are associated with the business of exports and imports in the international business. Legal supply contracts should be essential for the company is taking advantage of the markets and deliver products to the respective clients before deadlines (Di Angelo & Salzer, 2020). It is one of the most important factors in the success and facilitating of international business. It is one of the most important parts of international business. Buyers and sellers must be incorporated in those kinds of supply contracts that are associated with the different kinds of raw materials and components (Pavez et al. 2019). It is one o0f the most important factors in the business of any organization in maintaining proper supply chain management. These kinds of contracts ensure the delivery of goods, products, and services to the importers.
Importance of international distribution contracts
The main objective of contracts of international distribution is to maintain more sales points or more distributors in the same geographical locations. Distribution contracts are essential for any business for long-term success and harmony among different parties or distributors.
Role of international alliance contracts
Day by day international markets become more competitive business markets due to more competitors competing for the same business. Hence the company must maintain its survival in the international markets with the help of making alliances with other parties (Voloshyna et al. 2019). It is one of their most significant roles in maintaining sustainability in international markets and also necessary to increase market share for any joint venture business. It is one of the most important contracts because it helps companies financially in their survival in business.
International manufacturing contracts
International manufacturing contracts are related to contracts when one company manufactures products or components for another country. These kinds of contracts are beneficial for both the companies financially and technologically.
Conclusion
Based on the above discussion it can be concluded that international contracts play a significant role in international business and also the economy of any country. It is important in maintaining sustainability in the business and economic activities of any country. It is one of the most important in organizational progress and success. Based on the earlier discussion it can be concluded that international sales contracts reflect the needs of any country and how countries can fulfil their needs in maintaining good relations with other countries. To overcome threats of competition it is necessary for the company to build an alliance with international partners.
References
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Di Angelo, M., & Salzer, G. (2020, February). Characterizing types of smart contracts in the ethereum landscape. In International Conference on Financial Cryptography and Data Security (pp. 389-404). Springer, Cham. Retrieved from: http://fc20.ifca.ai/wtsc/WTSC2020/WTSC20_paper_14.pdf
Liao, W., Kilcoyne, M. S., Hardy, M. M., & Parker, C. (2018). Does our course content meet the employers’ needs? An exploratory study specifically related to international business in Louisiana. International Journal of Business Management and Social Research, 4(2), 229-239. Retrieved from: https://www.journalbinet.com/uploads/2/1/0/0/21005390/26.18.4.2_does_our_course_content_meet_the_employer_needs_an_exploratory_study_specifically_related_to_international_business_in_louisiana.pdf
Matvieiev, P., Klepikova, O., Kornuta, L., Abbaszade, M., & Kuznetsov, S. (2021). Public and private economic and legal interests in the field of international transport in the latest edition of Incoterms. Amazonia Investiga, 10(46), 217-224. Retrieved from: https://amazoniainvestiga.info/index.php/amazonia/article/view/1791
Nishida, Y., Saito, H., Chen, R., Kawata, A., Furuse, J., Suenaga, K., & Igarashi, A. (2021, March). Helmholtz: A Verifier for Tezos Smart Contracts Based on Refinement Types. In International Conference on Tools and Algorithms for the Construction and Analysis of Systems (pp. 262-280). Springer, Cham. Retrieved from: https://link.springer.com/content/pdf/10.1007/978-3-030-72013-1_14.pdf
Nyarko, J. (2019). We’ll See You in… Court! The lack of arbitration clauses in international commercial contracts. International Review of Law and Economics, 58, 6-24. Retrieved from: https://millstein.law.columbia.edu/sites/default/files/content/docs/We%27ll%20See%20You%20in%20.%20.%20.%20Court%21%20The%20Lack%20of%20Arbitration%20Clauses%20in%20International%20Commercial%20Contracts%20%28December%202018%29.pdf
Pavez, I., Codron, J. M., Lubello, P., & Florêncio, M. C. (2019). Biosecurity institutions and the choice of contracts in international fruit supply chains. Agricultural Systems, 176, 102668. Retrieved from: https://www.sciencedirect.com/science/article/am/pii/S0308521X18309612
Petrová, M., Krügerová, M., & Kozieł, M. (2021). NEW CHALLENGES IN INCOTERMS IN THE BACKGROUND OF THEIR HISTORICAL DEVELOPMENT. ACC Journal. Retrieved from: https://dspace.tul.cz/handle/15240/161353
SOGA, H. (2021). An Exploratory Analysis of the Factors Affecting Incoterms Selection from the Perspective of Firm Characteristics. International Journal of Japan Association for Management Systems, 13(1), 9-14. Retrieved from: https://www.jstage.jst.go.jp/article/ijams/13/1/13_9/_article/-char/ja/
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Wardani, N. K., & Afriansyah, A. (2020, March). Indonesian Legal Challenges Regarding Electronic Contracts in International Trade. In 3rd International Conference on Law and Governance (ICLAVE 2019) (pp. 23-30). Atlantis Press. Retrieved from: https://www.atlantis-press.com/article/125937696.pdf
Yaakub, S., Szu, L. Y., Arbak, S., & Halim, N. A. (2018). INCOTERMS selection factors and their effect on export performance. Journal of Advanced Research in Business, Marketing, and Supply Chain Management, 2(1), 9-18. Retrieved from: https://www.jarims.aibma.org/images/vol22018/sbppg9-18.pdf
Zarkalam, S. (2018). Requirements of the Formation of Electronic Contracts in Iranian Law in In Light of International Documents. AD ALTA: Journal of Interdisciplinary Research, 1(1). Retrieved from: http://research.shahed.ac.ir/WSR/SiteData/PaperFiles/137882_15319517492.pdf
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