1.5 Summary

In this chapter, you were introduced to the terms Value Chain, Global Value Chain, International Trade Process, Stakeholders and Documentation. Relationship between Value Chain and Supply Chain was also discussed. The value chain provides a useful tool for managers to examine systematically where value may be added to their organizations. This tool is useful in that it examines key elements in the production of a good or service, as well as areas in which value may be added in support of those primary activities. The Primary participants in international trade are exporters and importers which take help of carriers, freight forwarders, banks, insurance companies etc. to function efficiently.  Essential documents for importing and exporting include the bill of lading, which is the contract between the exporter and the carrier; the export declaration, which the customs office uses to verify and control the export; and the letter of credit, which is the legal document in which the importer promises to pay a specified amount of money to the exporter when the bank receives proper documentation about the shipment. In regard to relationship between value chain and supply chain, supply chain is a broader concept than value chain; the latter refers to activities within one firm, while the former captures the entire process of creating and distributing a product, often across several firms.