Effective management of foreign trade

Functions of foreign trade

At its core, trade is a certain type of activity, the task of which is the exchange of goods under certain laws. There are two options for the exchange of goods - direct, otherwise it is called barter, and, accordingly, indirect - with the use of money as a means of exchange. Foreign trade (export) implies a variety of trade relations with representatives of other states. Without a doubt, exports play the most important role in the economic life of any state, as it provides a solution to three of its main functions. First of all, effective and competent management of foreign trade allows the state, as a business entity, to stimulate the economical expenditure of national resources, including natural resources, which has recently acquired great importance. Second, the positive dynamics of foreign trade, of course, ensures the opening of new industries, which in turn increases the number of jobs in the state, thereby reducing the social indicator such as unemployment. Thirdly, the high efficiency of foreign trade allows the country to receive a sufficient inflow of foreign currency, which, in turn, contributes to the development of industries, including import-substituting enterprises, the re-equipment of enterprises, the purchase of new technologies, the increase in gold and currency reserves, Favorable conditions for the inflow of certain investments into the country. Thus, the quality and responsible management of foreign trade is a priority task of any state in the person of its government, Russia is no exception.

Factors of successful foreign trade

Effective management of foreign trade implies the analysis and consideration of a certain set of factors that can radically affect the results obtained. The most common factor on which the dynamics of foreign trade depends is various kinds of risks. As you know, risks appear at the stage of production of a particular product, or rather, even at the stage of preliminary market segment research. As is known, cases of negative results of conducted research are not uncommon, which already ensures the non-return of funds invested in research. Even worse can be the situation when these preliminary studies for one reason or another become erroneous. Proceeding from the foregoing, the foreign trade department should be oriented in such a way as to exclude such risks or at least compensate them with other, more successful projects. Do not exclude the risks of the so-called financial nature. We are talking about a possible non-return of capital investments, related to various kinds of force majeure situations, for example, hurricanes, tsunamis, earthquakes, etc., changes in the political system in another country.

Profit as a measure of quality

Naturally, the efficiency of foreign trade is determined by the size of profits, however, as in all types of trade. As is known. Exaggeratedly speaking, profit is the difference between the amount received from sales and the invested funds. With an equal and stable price in the foreign market, profits can be increased by cutting costs and expenses. But in this situation it is worthwhile to understand that the costs and costs when selling on the domestic market are less than for export options, as a result, the profit will decrease, thereby reducing the profitability of production. Managing foreign trade, this aspect must be taken into account without doubt.