Importation of materials from foreign manufactures is known simply as international trade. However, the United States government imposes many trade barriers in accordance to trade agreements of the same. International trade is hugely beneficial to the United States Automotive manufactures. This is because the company is able to obtain manufactured goods from other regions in order to facilitate production of goods and offer better services. This paper seeks to discuss the effects and causes of the same from international trade.
Importation of automotive products globally can be hugely beneficial but extremely costly, as well. This is because participating in trade agreements means following regulations and trade policies, which may encourage importation of certain products and at the same time restrict the importation of other products.
Causes of Importing Materials from Foreign Manufacturers
There are nay reasons and causes why I recommend the importation of materials from foreign manufacturers. It is necessary to note that, as United States automotive manufacturers, the availability of raw materials is extremely critical. Therefore, in order to obtain outstanding quality raw materials, it is necessary to get involved or engage in international trade. This is because international trade allows to exchange different automotive finished products. The other cause for engaging in international trade is in order to produce capital-intensive products, which can be acceptable in different countries around the world (White, 1996).
The principal of comparative is one of the major causes of importation of materials from foreign manufacturers. This is because it influenced the theory and policies of import. In other words, the company can chose from adhering to the policies and regulations or do without the resources or import goods and materials. In this case, the importation of these raw materials will not help only the company to achieve higher quality in its running and production but also will help the company to maintain its standard in the international community and nationally. It will also ensure that the company imports finest quality automotives, that will satisfy all the customers’ demands. This is hugely beneficial to the company. However, it affects and attracts other related consequences, which may lead to a trade deficit.
Causes and Effects on the Economy
The cause’s push of inflation is an effect that will occur when the automotive products experience and increase on the prices. This rise in prices is caused by higher costs imposed on the raw materials. This cost-push inflation is determined by supply factors, which occur when the demand grows at a faster rate than the supply. The causes of these effects are higher prices in the commodities, imported inflation, higher wages, higher taxes, high food prices and rise in imported raw materials prices. It is necessary to note that deflation in economic is generally the decrease in price of some commodities. This effect reduces the real value in the kind of money. In this way, the national currency also increases from the same. According to many economic, inflation is extremely serious problem that can cause the Automotive Company to get loses from its importations and its company running (James, 1999). Simply, this means that poor economic growth corresponds to deflation episodes.
A shift in demand and supply carve is the main cause of deflation, which has devastating effects on the economy. This is because it delays the customer’s incentive through the consumption and purchase of the same. In this way, it leads to reduction in the aggregate demands, investments and the product prices. Increasing demand by the fiscal authority is a way of expanding the money supply of the same. However, it is amusing to realize that deflation is a natural condition that reduces the velocity of money. In other words, it affects the population growth and the economic growth of the nation and the company, as well.
Causes and Effects on People
There are many health risks, associated with importation of materials from foreign manufacturers. Research on the same reveals that imported materials and products may contain substances that are harmful to the human health. Simply, this means that exposure to some imported residues can affect the health of the people involved. The research on the same also shows that asbestos exposure can cause and risk lung diseases and are thus a potential health risks to the people handling the imported materials. The continued exposure to the same may cause serious lung damage and diseases such as shortness of breath and cancer amongst many others.
In this case, the company must ensure that it complies with the enforcement and compliance assurance to ensure that it complies with the international environmental laws and rules. It should also ensure that it maintains and regulates pollution prevention and chemical safety. The company should also put in place incentives that help to ensure and determine the health of all its employees, workers and persons involved in the importation of the materials from foreign manufacturers.
In the first visual case, from a global market point of view, value equation is extremely beneficial especially in a hesitant economic environment. Therefore, in order for the automotive company to satisfy and retain its remaining customers, it has to maintain its position or share in the market place or international market place. This will ensure that the Automotive Company is positioned to deliver goods and services with added value. In other words, the company management must be capable of providing capable information that is dependant, reliable and compelling. Therefore, the key factor in the international transactions should be to gain profits and balance the value of the automotive commodities. This is because any slight alteration on the balancing may lead to definite loses.
The second visual case is related to marketing research. As a global manager, I insist that understanding the market prospects in extremely crucial and significant in international trade. This is because the company will be able to understand customer needs better and be able to attend to these needs (Laux ,1992). This will also enable the Automotive Company to understand its market competitors and learn new marketing strategies.
Importation of materials from a foreign manufacturer is simply a purchasing side of the trade. The company is able to acquire goods and services from other regions and sell the same as exporters. In this way, the Automotive Company benefits tremendously from the products from other regions and is able to ensure that its customer get the best from the best. However, the regulations and risks on the same are a part of the international trade. In this way, the company has to risk a lot in order to gain more profit on the same.