ROLE OF PORTS IN INTERNATIONAL BUSINESS

ROLE OF PORTS IN INTERNATIONAL BUSINESS

(BY- FYBBA SIDDHARTH MEHTA ROLLNO-304)
MIT-WPU PUNE

INTRODUCTION

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 ROLE OF PORTS IN INTERNATIONAL BUSINESS

Today the world is changing rapidly due to technological development in many countries .the
change is so rapid that it takes only days to reach to each and every part of the world. This
change is facilitated by trade. Trade involves flow of goods from one country to another without
any economic restrictions. Trade facilitates development of developing as well as
underdeveloped countries .by providing them an established world market to show their
excellence in various sectors.

Trade provides a market for young entrepreneurs who are most prone to technological
development and dynamic research. It helps in dynamic thinking and development of
entrepreneurial ideas to attract the global market. Trade makes a global market for every
countries to showcase their talents in various sectors. Trade is done through ports established
near the sea and ocean. Ports are the infrastructure facilities which help in loading and
transportation of goods such as( steel ,heavy locomotives ,raw material ,coal etc).

Ports act as a link between efficient production and final consumption. Efficiency in production
due to availability of raw material from other country and consumption for domestic as well as
international consumer by trade.

Ports are essential for economic development and improving international business .In the last
few decades the trade volume has increased drastically due to addition of new entrepreneurs and
industrialist in global market for providing the best quality of good and services .for eg in 2018
USA(the economic superpower) trades in trillion having exports standing at 2.2 trillion which is
larger than many developed economies such as (Norway Sweden Netherlands and Finland)
economies and imports standing at 2.7 trillion having trade deficit have 500 billion dollars.

International business refer to trade of goods and services, technology ,capital and flow of
knowledge across national borders. International business require a common market to
understand requirement of global customer. Ports are the cash cow for developed as well as
potentially developing countries. ports require huge capital expenditure but the revenue income
earned through trade can surpass it. This can be evaluated by SEM (STRUCTURAL
EQUATION MODEL) which divides the countries into developed and developing countries.
The result reveals investment in port leads to increase in international trade and economic
stability.

Countries like USA, china, and Germany earns billions of dollars through ports for eg shanghai
port of china , los angels ports of USA, Hamburg port of Germany

Importance of ports facilitates

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 ROLE OF PORTS IN INTERNATIONAL BUSINESS

 Inflow of foreign direct investment

 Improved scope for international business
 Specialization and standardization (optimum utilization of resources)

FOREIGN DIRECT INVESTMENT- The FDI inflows is the common example for developing
countries like china and India which have the world largest FDI inflows due to availability of
human resources and entrepreneurial ideas to shape an idea for the world importance.
International business in these countries is higher showing their competency in every sector.
china fdi inflows are 136 billion dollars making it the country holding the worlds share on FDI.

SCOPE FOR INTERNATIONAL BUSINESS- ports are the infrastructure facility that boost the
transportation and reduces the time between production and consumption .the reduction in time
utility helps in maintaining the quality control of the product . Port stimulates trade relation with
other countries and promotes international business. The top companies of the world such as
apple, Amazon, Berkshire Hathaway are benefited from trade with other countries.

SPECIALIZATION AND STANDARDIZATION- Resources are unevenly distributed among

countries. Specialization and standardization states the expertise of work without any defect.
Specialization is reducing the defect in the process where as standardization is setting standard in
quality and quantity. Trade promises quality and quantity of the product which satisfies
consumer demand. For eg - Germany specializes in automobiles, Russia in defense equipments,
China in electronic products, USA in information technology.

All the developed countries have very sounding infrastructure in ports to promote international
business and Better facility to support huge volume of export from the country.

Ports are the areas of national importance which can be used at the time of emergency. For e.g. –
military surveillance.

Recently the construction of new ports in India shows a promising future for young entrepreneur
who want to create their enterprise and organization to rise globally to set big ventures to provide
the best quality products through the benefit of free trade.

Ports are the building block and lays a foundation for constructive business for development of
economy which supports millions of job in the country.

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 ROLE OF PORTS IN INTERNATIONAL BUSINESS

STATEMENT OF PROBLEM-

To understand the role of ports in international business.

RESEARCH METHODOLOGY-

The ports are the building blocks for country economic development and building good trade
relation to support international business. In this research we will discuss the impact and role of
ports in simplifying international business to contribute for betterment of the society. There are
some challenges in building ports like huge capital investment , numerous norms to be followed
,documents required etc

Through this research paper I want to discuss the future scenario of the entrepreneurs benefitting
through the trade of goods, services, and ideas

Ports are areas of national importance as it can be used for transporting essential commodity
required by other countries. To bring relevance to this research I talked to various stundents,
professors, industry experts to understand the core of international business and its requirement
in future.

OBJECTIVES

 To understand the model and structure the trade.

 Relation of ports with international business.
 Future of International business and trade.

RESEARCH FOCUSES ON UNDERSTANDING THE RELEVANCE OF PORTS IN

INTERNATIONAL BUSINESS.
Research started with the understanding of history of ports.

HISTORY- trade started a long back to explore the world .trade meant the exchange of goods
and services for value .evolution of trade in years coming after lead to development of new port
to meet the requirement of business in future . the first port was established in 3000 bc called as
Byblos port. The growing demand for ports are explained later in this research paper.

Many countries in the world today have prospered due to development of ports .the history
describes the development of ports in india to support business for great Britain.

Now, in this research we will understand the growing demand of ports in modern world

FOREIGN DEPENDENCE AND LUXURY

After the development of ports in developed countries. the west dominated the world with the
finest quality of goods and services .the developing countries still hoping for manufacturing and

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Production of best quality of goods and services were hitted back by lack of resources. The
modernization and technology shaped the new definition for international business.

ECONOMY OF OPERATION

Today the world has transformed to an era of globalization which is intergration of all economies
or world as a whole. The countries are focusing on goods which they can manufacture and
produce in a more efficient and effective way and the other good which they cant produce should
be imported from other countries to save manpower cost and time.

To understand we can see an hypothetical example

For eg- there are two countries A and B

COUNTRY A-country A specialize in production of fmcg products as a mark of global

significance but lacks in raw material for producing it so it can imported from COUNTRY B
which has the available resources to support countryA .

International business is an important phenomena which is driving people trends ,standards and
lifestyle by providing them the best in less prices.

EXPANSION AND OPERATION

International business made world one country. Today the ports serves as a binding force for
company operation .big company have an offices in each countries to operate in the global
market. for eg- The USA techgaint apple have assembly line in china but the product is packaged
as a finished product in USA. So ports can act as a link to acquire global share in international
market.

Now we will turn our focus of research towards the difficulty and problem for setting ports.

LACK OF CAPITAL INVESTMENT- many countries in the world cannot take the benefit of
trade because of lack of investment in setting ports to support international business. The port
require huge cost of establishment, loss and repair, expansion and management. lack of
government support in some countries (political will) pose challenges for setting ports.A

LACK OF ROAD NETWORKS-many developing countries like india Bangladesh and srilanka
lack better quality roads which supports trade. Due to unavailability of better quality roads the
country hesitates in setting in new ports.

Now we will discuss challenges and opportunity for entrepreneurs in international

business.

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OPPORTUNITIES FOR ENTREPRENUER-

1. Targeting new markets- entrepreneurs can be benefitted by the world market by the special
skill they posses in a particular area or sector.

2. Technology advancement- entrepreneurs can take the advantage of technological

advancement from other countries by importing it and saving time for business operations.

3. Innovation for global market- entrepreneur can use their creativity to bring a revolutionary
change in the global market using their expertise and professionalism.

CHALLENGES FOE ENTREPRENUER-

1. Global competition – entrepreneur face global competition from developed countries which
have the availability of all resources to finance their operations. Competition posses challenge
for quality and quantity control .

2. Dynamic Business Environment- international market is dynamic in nature due to presence

of political , economic, social, legal and cultural barriers .Asserting the risk factor and planning
procedure becomes difficult for new entrepreneurs.

Now we will understand the relationship between ports and international business through
quantitative approach

The data represents dominance of ports in world trade and business

A ) world trade is 32430 billion USD (Amount IN USD)

1 EUROPEAN UNION-

International trade of goods = 3821

Total trade in the world = 32430

European union share in international trade is 11.78%

Biggest port in European Union is Rotterdam

2 UNITED STATES-

International trade of goods= 3706

Total trade in the world=32430

United States share in international trade is 11.42%

Biggest port in USA is los angles

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3 REPUBLIC OF CHINA

International trade of goods= 3686

Total trade in the world=32430

China in world trade is 11.36%

Biggest port in china is shanghai port

4 GERMANY

International trade of goods=2626

Total trade in the world=32430

Germany in world trade is 8.09%

Biggest port in Germany is Hamburg port

5 UNITED KINGDOM

International trade of goods=1066

Total trade in the world =32430

United Kingdom in world trade 3.28%

Biggest port in United Kingdom is

6 JAPAN

International trade of goods=1250

Total trade in the world =32430

JAPAN in world trade is 3.85%

Biggest port in JAPAN is Nagoya

7 FRANCE

International trade of goods=1074

Total trade of goods=32430

France in world trade is 3.33%

Biggest port in France is Marseille

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 ROLE OF PORTS IN INTERNATIONAL BUSINESS

8 NETHERLANDS

International trade of goods= 1073

Total trade of goods=32430

Netherlands in world trade is 3.30%

Biggest port in Netherlands is Rotterdam

NETHERLANDS

FRANCE

JAPAN

UNITED KINGDOM
Country in world trade
GERMANY Total trade in the world
International trade of goods

REPUBLIC OF CHINA

UNITED STATES

EUROPEAN UNION-

0 5000 10000 15000 20000 25000 30000 35000

The bar chart shows the trade of different countries or dominance in international business.

DATA ANALYSIS

The data shows the dominance of ports in international business. The data reveals very important
information for researchers it shows the top ports in every country have more than 15 percent
share in the country trade. This data however reveals the country share in world trade. We will
now understand our trade in international business.

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 ROLE OF PORTS IN INTERNATIONAL BUSINESS

INDIA TRADE IN INTERNATIONAL BUSINESS

India was a very rich country before the advent of Britishers. India accounted for 23% of world
trade and now it is 2% 2018.

We will now turn our focus towards Indian ports and its growth prospects

India is fortunate country to have a coastline of 7500 km. There is a high scope for country
development in trade sectors by establishing new ports to support old ports. some of important
ports contributing to international trade are as follows

1 Kandla port = 105 Billion tones

2 Paradip port = 89 Billion tones

3 Mumbai port = 63 Billion tones

4 Jnpt = 62 Billion tones

5 Vishakapatnam = 61 Billion tones

Growth prospects for Indian trade

India is building 6 new ports to reduce the burden of old ports in india.

 Greenfield major ports to be developed at Vadhavan (Maharashtra), Sagar Island (West

Bengal), Paradip Satellite Port (Odhisha), Cuddalore/Sirkazhi (Tamil Nadu) and
Machilipatnam/Vodarevu
 International Container Transhipment hub at Enayam (Tamil Nadu) and Vizhinjam
(Kerala)

India is growing at a very rapid rate demanding the best quality of goods and services which is
posing a challenge to western world to increase its share in world trade.

India trade in future (projection by WTO)

India in 2025 would increase up to 4% showing a 200 percent growth in 6 years.

India in 2050 would increase its trade up to 9% in world trade.

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SUGGESTION

A) FOR THE ENTERPRENEURS-

“NEVER LOSE THE HOPE AS THERE IS A NEW DAY EVERY MORNING”
Entrepreneur should never lose the hope. The business environment is dynamic in nature
To adjust with the environment every entrepreneur need time .the entrepreneur should
design new plans according to changing business environment to remove all the
deviations and use its creativity to target new markets to gain market share in global
market.
B) FOR THE GOVERNMENT-
“RESOURCES GROW THEIR POTENTIAL EVERYDAY”
Government should invest in building new ports .building new ports help in transporting
the goods on time and create its demand in global market. Indian government is investing
around 40000cr to develop 6 new ports because of increasing exports and imports.
C) ORGANISATION
“INNOVATION AND CREATIVITY GOVERNS WORLD TRADE”
Organization here means the companies which take part in world trade. Organization
Should create a startup culture among employees and indulge them in research and
development to make something new for world market.
“INCREASE IN TRADE IS SUPPORTED BY IMPROVEMENT IN PORTS”.

CONCLUSION
After getting an insight of importance of ports in international business . We have to
come to conclusion:-
In our work we gave importance to effect of ports in international business ,we discussed
the scope of entrepreneurs in dynamic business environment, we made data analysis of to
show the country share in international business, we saw the model of international
business ,then we looked the scope of ports in india, we saw the new projects to come in
future years through this study we made assumptions of Indian trade in future. This
research paper predicts nice future for Indian ports in international business.

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BIBLIOGRAPHY

1 http://climb.pcc.edu/blog/how-international-trade-can-impact-your-business
2 https://www.investopedia.com/insights/what-is-international-

3 https://www.perrymangroup.com/2017/07/03/the-importance-of-ports/

4https://www.researchgate.net/publication/273792012_Review_on_the_Role_of_Ports_in_the_D
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5 https://jshippingandtrade.springeropen.com/articles/10.1186/s41072-018-0027-0

6 http://www.worldshipping.org/about-the-industry/global-trade/top-50-world-container-ports

7 https://www.worldatlas.com/articles/the-busiest-cargo-ports-in-the-united-kingdom.html

8 www.financierworldwide.com/challenges-and-opportunities-in-the-port-sector-in-india/

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india/#.XGlLYOQzbIU

10 https://en.wikipedia.org/wiki/Indian_maritime_history

11 https://en.wikipedia.org/wiki/Ports_in_India

12 https://maritimeinvest.in/new-port-development

13 https://www.itln.in/india-to-double-exports-by-2025-suresh-prabhu-trade-and-ecommerce

14 https://www.amazon.com/Understanding-Global-Trade-Elhanan-Helpman/dp/0674060784

15https://www.amazon.com/One-World-Trade-Center-Biography/dp/0316336319

16https://www.barnesandnoble.com/b/books/international-economics/world-trade-organization-
gatt/_/N-29Z8q8Ztl3

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