Business and globalisation - EdexcelExports – selling to overseas markets

Exporting refers to a country selling products and services to other countries around the world. When the UK sells products and services to foreign countries, money comes back into the UK economy. One of the UK’s biggest exports is vehicles. Vehicles made by some of the biggest car brands are produced in the UK and then shipped abroad in return for money.

Some products, such as Heinz Baked Beans and Harris Tweed, are famous for being produced in the UK and Ireland. These items are sold around the world.

SPICED and WPIDEC

Two important acronyms to remember about exports are SPICED and WPIDEC. These describe two different potential states of the economy. They stand for:

SPICED is good for businesses that import goods and services from overseas as it means products are cheaper because of the exchange rate. However, under SPICED, businesses that export goods and services may either sell less or have lower profit margins. This is because overseas buyers have to pay more due to the exchange rate, or the exporting business will keep the same price with a lower profit margin.

WPIDEC is the exact opposite. Importing goods and services becomes more expensive due to the exchange rate, and this extra expense is often passed on to customers. Businesses that export goods and services may see an increase in sales. This is because the exchange rate either makes the goods and services cheaper for foreign buyers or provides exporters with more profit.