1). The purpose of the assignment is to apply the Trade Law taught in the module to export or import scenarios of your choosing so that you can demonstrate how Trade Law works in practice rather than just theory.
2). The export (or import) scenario is entirely up to you; perhaps it is a trading activity you would like to do after graduation involving trade between your home country and another country. Whichever scenario you choose, it will involve two specific countries, and importer and exporter and a specific product being shipped. For these you will investigate specific options regarding carriers, banks and insurance companies. Your scenario must involve shipping by sea (not by air) and it must not be solely within the EU. In general, it should be between continents, but there may be exceptions.
3). The module sessions will show the key documents, laws and regulations that are relevant for the assignment. In particular, the ‘key documents’ are the documents that will come up in any trading scenario. There are also ‘checklists’ that a trader should follow to achieve success in shipping, getting paid, mitigating risk, and dealing with disputes should they arise. That being said, do not concern yourself with government documents such as customs forms or import licences, as these documents are not covered in Semester 2.
4). Your paper should, in essence, follow this checklist approach for your specific scenario. It should be a business report showing that you have investigated the options for your trading scenario and analysed them in the context of the module. As with all business reports, you should recommend specific options and choices based on your scenario, assumptions and the evidence that you provide.
6). Examples of how to research shipping options will be covered during the module: You should ‘shop around’ with different carriers and you should get different ‘quotes’ and contracts from them. Is one carrier option better than another in terms of applicable law, dispute resolution or insurance terms? Another example would be to research financial institutions who deal with Letters of Credit and insurance for the countries involved—how should you choose one over another? Your recommendations should reflect and analyse the trade-offs involved and justify your choices with solid arguments.
7). Although there is more focus on the application of the law taught in the module to specific business scenarios, the laws themselves should not be ignored, so citing specific laws and/or cases to illustrate your points is important.
Overview of the Company
1. Scenario Introduction
International business or trading practices can be defined as an operational practice of the organization to commerce across the national borders. Due to rise incompetency in the contemporary business-oriented market, the majority of the organizations adopt globalization in order to seek better business and profitable market accessibility (Hill, 2008). In the simple context, it can be described that the local competition of the market has made it critical for the organizations to survive; therefore, to make the business more profitable and efficient, organizations are moving to potential target markets of abroad. International trade practices comply with various imports as well export laws from the national government. These regulations are formulated to keep a check on the quality, quantity, and type of the product or services that are being exchanged (Dunning, 2013). Along with this, it also helps the government officials in maintaining the taxation records for the import and export firms.
In this context, a business report is undertaken by considering a Singapore-based hypothetical firm “StarTrek Shipping” of import and export businesses. The central orientation of the report is to make a crucial understanding of the essential contracts within the context of ‘law of international trade' from the perspective of import/company trading through seaways. Considerations of the international business environment, trade law and factors influencing the shipping business are vitally discussed in this report. Along with this, challenges faced by the shipping company due to international trade law, the impact of challenges and some potential recommendations are also discussed in the study, to facilitate the purpose of this report. Overall, this report is formulated in a potential manner to meet the objectives of learning the application of Trade Law in real practices.
2. Overview of the Company
StarTrek Shipping is a well-known multinational brand in the import, export and shipping agency. The headquarters of the company is established in Singapore; however, the operations are active all around the world. Due to extensive connectivity factor provided by Singapore, StarTrek Shipping operates in more than 80 countries all around the world. The company was established in the year 1995 as a sea-way shipping company. With time, in 2006-2007, the company expanded its business because of consistent support from the customers. The shipping consignment started carrying Japanese steel products, coal, iron, forest products, various ores, plant cargoes and grains to the United States and Southeast Asia.
Presently, the company is highly established to serve its customers with modern controlled fleets of 550,000DWT, ranging from 4000DWT to 40,000DWT. Moreover, the company also owns chartered vessels, which are a consistent requirement throughout the year in the shipping industry. In recent times, the company has acquired the emerging markets of China, India, and the Middle East countries by exporting cargoes, construction machines and latest Ro/Ro and PCTC vessel vehicles. The policy of the company is strictly aligned to continue challenging new fields and provide satisfactory services to the customer.
Introduction to International Business Environment and Trade Law
In addition to this, StarTrek Shipping is potentially involved in many other services such as crew management, ship consultants, new building supervision, project management and yacht management. Furthermore, the company is also involved in the business of offshore services, technical management, ship finance and Oil & Gas Ship Management Service, with an objective to facilitate the organization in terms of maximum profitability and access to potential market opportunities.
3. Introduction to International Business Environment and Trade Law
In the competitive era of the modern economy, international business is considered as an enormously pertinent facade. International business is collectively defined as the summation of commercial communications that took place between the two or more countries by trading across the political boundaries. Policies of international trade environment are not restricted to business practices only, as government, NGOs and other administrative bodies also operate across the national border without considering profitability (Wild, Wild, and Han, 2014). In the simple context, the term international business is an extensive contribution of trades and transactions of the global market. The inclusion of trading into goods, services, products, and knowledge falls under the consideration of the international business environment. Sometimes, worldwide trades are aligned with the globalization of company, which indicate the trading of investment, information technology, goods, services, capital and outsourced manufacturing (Büthe and Milner, 2008).
On another side, international trade law is used to define a set of norms or regulations that are potentially used by companies to manage trade relation between two or more countries. Even, the private sector organization uses trade law as a legal writing to handle trade between different countries. Trade Law, in itself, has become an independent branch of law study because a majority of the governments became part of WTO (World Trade Organization). The following branch has gained enormous significance in the recent years due to the necessitation of trade relations between various countries. In order to sustain the competency of the market, WTO activities are crucially considered by the organization; therefore, the academic association of trade law is augmented in many universities across the world. Attributes of international trade law are widely separated from the vast field of international economic law (Weiss, Jackson and Bernasconi-Osterwalder, 2008). Overall, the contemplations of the international business environment, as well as international trade law, are centrally oriented to facilitate the contemporary organizations in gaining market values and business opportunity under the scrutiny of trade regulations and values.
Factors Influencing the Import and Export Business of StarTrek Shipping
4. Factors Influencing the Import and Export Business of StarTrek Shipping
Import and export are one the market-leading businesses due to its association in various countries. People interested in sales and diplomatic business character consider it as an ideal occupation. Whereas, there is no denying the fact that this business is highly vulnerable to various politics, economics, and legislative changes. Out of it, some potential challenges are mentioned below:
- Foreign Exchange:Prices committed for the shipping service can also vary due to change in exchange rates and inflation rates of two different countries. Different currency rates of different governments complicate the trading of products and services without currency hedging (Serra, Pointon and Abdou, 2012).
- Goods in Transit:Security of the goods that are transported is also a crucial factor for the shipping factory. The goods in transit can get damaged, theft or destroyed, thus the shipping industry needs to carry insurance from the manufacturer to the buyer, who is living across the geographical precincts (Serra, Pointon and Abdou, 2012).
- Non-Payment:Shipping industry is also debilitated by non-payment services to a great extent. Bankruptcy and political commotion bring challenges for the import/export businesses, as it makes the client disinclined to pay for the services of importing goods (Shenkar, Luo and Chi, 2014).
- Natural Disasters:Sea-way transport companies are highly prone to get affected by natural disasters such as Tsunami and volcanic eruptions, which further leas to great loss in the business. Even, the insurance companies provide a limited degree against the natural disasters and thus, only the companies have to bear the trouncing (Albaum and Duerr, 2008).
- Free-Trade Agreements:Government policies between two or more countries to remove tariff barriers for trading goods and services can hamper the operational practices of the company. These agreements play a significant role in settling the trade disputes between two countries by acting as a legal trade framework (Shenkar, Luo and Chi, 2014).
5. Challenges Faced by the StarTrek Shipping in Fostering Business Due to International Trade Law
StarTrek Shipping is a multinational organization, which posses’ giant market value of Singapore’s shipping industry. Extensive engagement in the import and export trade practices comply the organization to deal with international trade law. It is a set of regulations formulated to facilitate the smooth execution of trading between two different countries. However, some impending trade law challenges faced by StarTrek Shipping are presented below:
- Security Threat:Many countries across the world are very hospitable to multinational shipping companies, but security concerns about the imported and exported products are negligible there. StarTrek Shipping is hesitant to incidents such as piracy, armed robbery and cyber crimes as concerned national authorities are least involved in the services (Redfern, 2015).
- SOLAS Compliance:Implication of SOLAS Compliance has made shipping industry an organized business venture. Now, the vessel operators are ordered to load only the packed containers having Verified Gross Mass (VGM) declared by the shipper. This made StarTrek Shipping emphasize especially on the recruitment of effective management for vessel operations (Redfern, 2015).
- Alliances and M&As:Due to disproportionate competition in the shipping industry, companies are constantly heading to make things and services cost-efficient and profitable. Due to improper trade law standards about port shedding and port operations, StarTrek Shipping is challenged by various alliances. Moreover, the company is also oriented to introduce more cost-efficient ships and third party logistics business (Mingst and Arreguín-Toft, 2013).
- Increased Consolidation and Mergers:Due to intense competition in the shipping industry, companies are incorporating consolidation and merger practices of fragmented units. This is explored as a critical challenge for StarTrek Shipping as the competitive organizations will become a Giant body in terms of capacity, manpower and operations after the merger (Mingst and Arreguín-Toft, 2013).
6. Comprehensive Evaluation of the Impact of Challenges on the Operations of StarTrek Shipping
The aforementioned challenges, faced by StarTrek Shipping gravely affect the functionality and development policy of a shipping industry. Along with this, it also impinges on the operational strategy by manipulating the proposed business objectives. A critical evaluation of the impact of challenges on the operations of StarTrek Shipping is discussed below:
- Due to lack of security arrangements in the midst of sea-ways, ship crew and other officials risk their lives to transport the goods, products, entities, and services. It leads to the generation of a feeling of distrust and trepidation among the crew, which will unswervingly hinder the individual efficiency and manpower (Bernard, Jensen, Redding and Schott, 2012).
- Though incorporation of SOLAS Compliance simplified the overall vessel operation by using Verified Gross Mass (VGM), StarTrek Shipping was challenged as it has to hire skilled employees for the appropriate execution of the proposed strategy (Koskenniemi, 2009).
- Consideration of various alliances and M&As complicated the business practice for StarTrek Shipping. Along with effective operations, cost-efficient business practices also became a matter of challenge for the company (Chuah, 2009).
- The rise in consolidation and mergers of other fragmented companies enhanced the risk factor and competition for StarTrek Shipping. The collective power of two or more business bodies will conquer the potential market opportunities of the company (Bernard, Jensen, Redding and Schott, 2012).
- Due to unified international trade law, StarTrek Shipping will also visage the problem of economic interdependence. Moreover, rise in the globalization of service; product and company will further facilitate the attributes of economic interdependence (Koskenniemi, 2009).
The following business is a globalized network of transport and therefore, StarTrek Shipping faces new challenges every day. In order to deal with the business challenges faced by StarTrek Shipping, due to international trade law, some potential recommendations are presented below:
- The organization is recommended to understand the regulations and judicial system of the destination. Every country comprises different culture, custom, ritual and services, therefore, prior indulgent about the regulations and system will help the company in serving the customer to a better extent (Yuen and Thai, 2015).
- The company is further suggested to emphasize on the packaging of the shipment material. Precious entities should be packed and transported in special cases or safes to protect damage, theft or other accident (Omrani and Keshavarz, 2016).
- StarTrek Shipping is further advised to decide the port shedding and port operations after considering the options carefully. This will help in making the services more cost-efficient for the company (Wilmsmeier and Hoffmann, 2008).
- The organization is also directed to keep a written record of the sender as well as the receiver. Even, information about the entity, which is to be shipped, should also be acknowledged by the company (Yuen and Thai, 2015).
- The company should not rely excessively on the vendors, port administration, and third-party transport business. Credible information about all these bodies is obligatory for the shipping company (Wilmsmeier and Hoffmann, 2008).
On the basis of discussions and arguments presented above, it can be concluded that StarTrek Shipping is a renowned organization of Singapore in the sector of shipping, import and export businesses. Since 1995, the company is in the business of transporting through sea-ways. Consistent business support from the customers helped the company in expanding its business by implementing effective business policies. The rise of globalization made StarTrek Shipping comply with the regulation and norms of international trade law. In this context, the aforementioned report is considered to vitally discuss the relevant aspects of international business environment & trade of StarTrek shipping. A crucial discussion over international trade law and the globalized business environment is incorporated in this report to present enlightening information over the proposed topic. Along with this, the study has even explored some potential factors that influence the import and export business practices of StarTrek Shipping.
Besides, this study has also made a comprehensive discussion of the challenges faced by the company in business progression due to international trade law. For instance, security services, SOLAS compliance, mergers, and consolidation are few examples of the explored challenges. Afterward, the impact of the following challenges over the business practices of StarTrek Shipping was also examined in the following research report and on its basis, some imminent recommendations were also proposed to the company. The implication of the proposed actions will lead to the overall and sustainable development of StarTrek Shipping. Overall, this research report can be considered as an informative piece of research work on the proposed topic. The orientation and execution of the report have vitally justified the central idea of the discussion. Moreover, the findings of this academic literature will be a significant contribution to the discussions of international business environment and trade law. Inclusive discussion of international business venture aligned with StarTrek Shipping has backed the research in meeting the purpose of the study.
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