User:Mlmartens/Export strategy

Export Strategy is to ship commodities to other places or countries for sale or exchange. In economics, an export is any good or commodity, transported from one country to another country in a legitimate fashion, typically for use in trade.

Vessel Bunga Raya Satu at CTA

Overview

Advantages of Exporting

Ownership advantages are the firm’s specific assets, international experience, and the ability to develop either low-cost or differentiated products within the contacts of its value chain. The locational advantages of a particular market are a combination of market potential and investment risk. Internationalization advantages are the benefits of retaining a core competence within the company and threading it though the value chain rather than obtain to license, outsource, or sell it. In relation to the Eclectic paradigm, companies that have low levels of ownership advantages either do not enter foreign markets. If they company and its products are equipped with 'ownership advantage' and 'internalization advantage', they enter through low-risk modes such as exporting. Exporting requires significantly lower level of investment than other modes of international expansion, such as FDI. As you might expect, the lower risk of export typically results in a lower rate of return on sales than possible though other modes of international business. In other words, they usual return on export sales may not be tremendous, but neither is the risk. Exporting allows managers to exercise operation control but does not provide them the option to exercise as much marketing control. An exported usually resides far from the end consumer and often in list various intermediaries to manage marketing activities.

Disadvantages of Exporting

For Small-and-Medium Enterprises (SME) with less than 250 employees, selling goods and services to foreign markets seems to be more difficult than serving the domestic market. The lack of knowledge for trade regulations, cultural differences, different languages and foreign-exchange situations as well as the strain of resources and staff interact like a block for exporting. Indeed there are some SME’s which are exporting, but nearly two-third of them sell in only to one foreign market. The following assumption shows the main disadvantages:

• Financial management effort: To minimize the risk of exchange-rate fluctuation and transactions processes of export activity the financial management needs more capacity to cope the major effort
• Customer demand: International customers are demanding for more services form their vendor like installation and startup of equipment, maintenance or more delivery services.
• Communication technologies improvement: The improvement of communication technologies in recent years enable the customer to interact with more suppliers while receiving more information and cheaper communications cost at the same time like 20 years ago. This leads to more transparency. The vendor is in duty to follow the real-time demand and to submit all transaction details.
• Management mistakes: The management might tap in some of the organizational pitfalls, like poor selection of oversea agents or distributors or chaotic global organization.

Making the export decision

Once a company determines it has exportable products, it must still consider other factors, such as the following:

• What does the company want to gain from exporting?
• Is exporting consistent with other company goals?
• What demands will exporting place on the company's key resources - management and

personnel, production capacity, and finance - and how will these demands be met?

• Are the expected benefits worth the costs, or would company resources be better used

for developing new domestic business? Answers to these questions can help a company not only decide whether or not to export but also determine what methods of exporting should be initially used.

Ways of Exporting

The company can decide to export directly to the foreign country or export indirectly.

Direct selling in Export Strategy

Direct selling involves seale representatives, distributors, or retailers who are located outside the exporter's home country. Mainly the companies are pushed by core competencies and improving their performance of value chain.

Direct selling through distributors

It is considered to be the most popular option to companies, to develop their own international marketing capability. This is achieved by charging personnel from the company to give them greater control over their operations. Direct selling also give the company greater control over the marketing function and the opportunity to earn more profits.
In other cases where network of sales representative, they company can transfer them exclusive rights to sell in a particular geographic region.
A distributor in a foreign country is a merchant who purchases the product from the manufacturer and sells them at profit. Distributors usually carry stock inventory and service the product, and in most cases distributes deals with retailers rather than end users.
Evaluating Distributors:

• The size and capabilities of its sales force.
  
• Its sales record.
  
• An analysis of its territory.
  
• Its current product mix.
  
• Its facilities and equipment.
  
• Its marketing polices.
  
• Its customer profit.
  
• Its promotional strategy.
  

Direct selling through foreign retailers and end users

Exporters can also sell directly to foreign [[retailing|retailers}}. Usually, products are limited to consumer lines; it can also sell to direct end users. A good way to generate such sales is by printing catalogs or attending trade shows.
Direct selling over the Internet:
Electronic commerce is an important mean to small and big companies all over the world, to trade internationally. We already can see how important E-commerce is for marketing growth among exporters companies in emerging economies, in order to overcome capital and infrastructure barriers.

E-commerce eased engagements, provided faster and cheaper delivery of information, generates quick feedback on new products, improves customer service, accesses a global audience, levels the field of companies, and support electronics data interchange with suppliers and customers.

Indirect selling

Indirect exports, is simply selling goods to or through an independent domestic intermediary in their own home county. Then intermediaries export the products to customers foreign markets. On the other hand, direct exports are goods and services that are sold to an independent party outside of the exporter’s home country.

The value of planing

Many companies begin export activities randomly, without carefully screening markets or options for market entry. While these companies may or may not have a measure of success, they may overlook better export opportunities. In the event that early export efforts are unsuccessful because of poor planning, the company may even be misled into abandoning exporting altogether. Formulating an export strategy based on good information and proper assessment increases the chances that the best options will be chosen, that resources will be used effectively, and that efforts will consequently be carried through to completion. The purposes of the export plan are, first, to assemble facts, constraints, and goals and, second, to create an action statement that takes all of these into account. The statement includes specific objectives; it sets forth time schedules for implementation; and it marks milestones so that the degree of success can be measured and help motivate personnel. The first draft of the export plan may be quite short and simple, but it should become more detailed and complete as the planners learn more about exporting and their company's competitive position. At least the following ten questions should ultimately be addressed:

1. What products are selected for export development? What modifications, if any, must be made to adapt them for overseas markets?
2. What countries are targeted for sales development?
3. In each country, what is the basic customer profile? What marketing and distribution channels should be used to reach customers?
4. What special challenges pertain to each market (competition, cultural differences, import controls, etc.), and what strategy will be used to address them?
5. How will the product's export sales price be determined?
6. What specific operational steps must be taken and when?
7. What will be the time frame for implementing each element of the plan?
8. What personnel and company resources will be dedicated to exporting?
9. What will be the cost in time and money for each element?
10. How will results be evaluated and used to modify the plan?

One key to developing a successful plan is the participation of all personnel who will be involved in the exporting process. All aspects of an export plan should be agreed upon by those who will ultimately execute them. A clearly written marketing strategy offers six immediate benefits:

1. Because written plans display their strengths and weaknesses more readily, they are of great help in formulating and polishing an export strategy.
2. Written plans are not as easily forgotten, overlooked, or ignored by those charged with executing them. If deviation from the original plan occurs, it is likely to be due to a deliberate choice to do so.
3. Written plans are easier to communicate to others and are less likely to be misunderstood.
4. Written plans allocate responsibilities and provide for an evaluation of results.
5. Written plans can be of help in seeking financing. They indicate to lenders a serious approach to the export venture.
6. Written plans give management a clear understanding of what will be required and thus help to ensure a commitment to exporting. In fact, a written plan signals that the decision to export has already been made.

This last advantage is especially noteworthy. Building an international business takes time; it is usually months, sometimes even several years, before an exporting company begins to see a return on its investment of time and money. By committing to the specifics of a written plan, top management can make sure that the firm will finish what it begins and that the hopes that prompted its export efforts will be fulfilled.

External links

• US Government Export Portal
• Export Strategy by Australian Government - Austrade
• Canada Wood Export strategy by Natural Resources Canada
• Export Strategy