Analysis Of The Advantages And Cons Of Exporting Marketing Essay

The ability of a company to export a proportion of its sales abroad is increasingly seen as a an important competitive way of measuring performance at national and the as local level (O'Farrell et al, 1996). There potential to activate in exporting is purported to be necessary ingredient to ensure the survival and expansion of new and small companies. Exporting is usually used as an entrance strategy for most companies venturing in foreign countries for the very first time. It is the accessibility strategy most well-liked by small and medium enterprises (SMEs).

Many Companies get started their international ventures by exporting due to the fact everything being equal, it's the least high-risk and easiest to recuperate from in case there is things not working out as planned. It's very flexible when compared with other strategies as the exporter can both enter into and leave from the market very easily. Some companies internationalize for different reasons, they may be either reactive or proactive to the marketplace i. e. businesses may react to competitors' action to look international and follow suit or simply anticipate its competition's move by being the first mover and achieving the first mover gain. However, there are very a number of things that a firm should devote to concern when exporting for the first time internationally. To ensure export, a firm should not forget the following
Assessment of the global market opportunities

Before exporting goods or services, there are a number of questions a company must placed into consideration. The firm must analyze the type of business it desires to find yourself in, the products involved and the mark market as whether it will accept the products or services being exported. The management of the firm should do a research before selecting the target market. The mark market should be attractive and all other aspect like travelling, customs polices and appropriate tariffs and tasks. Similarly, of for the most part importance is the culture of the country which must be assessed in order to understand the implications to business opportunities and challenges. There should be a great understanding of customer needs and preferences, the competitors, the federal government restrictions and the functions of the foreign intermediaries. The economic stability of the country is also an essential requirement to the exporter.

Organizing for exporting

For an organization to efficiently export its products, it must learn how to transport its goods internationally, learn all the required techniques required at customs offices and all the required documentations. The organizations must stick to all certain requirements of the united states it is exporting its goods to, failing to which can get charges and penalties.

Acquiring of needed skills and competencies

Hill (2007) is of the view that a person way for the first time exporters is to recognize the opportunities associated with exporting also to avoid lots of the associated pitfalls is to hire an export management company (EMC) who act as the export marketing section or international division because of their clients firms. It is important for organizations to obtain the right competencies and skills in order for the organization to survive in the market. The organizations must learn what's required of these to succeed in those market segments before shifting to other markets. A lot more knowledge the organization acquires about the exporting strategies, the greater competencies and right skills it benefits and a definite picture.

Different Export Strategies OPEN TO a Firm

There are two major strategies that an organization must consider in terms of exporting into another country. Under these two major strategies;

The first strategy is called an Autonomous Strategy or sometimes known as the go it by itself. This strategy involves the organization choosing to go into another country together. The Foreign Direct Investment (FDI) is one technique you can use.

Foreign Direct Ventures (FDI) is the strategy mainly preferred by Multinational Country wide Enterprise and it is an collateral or ownership form of foreign market entry directly into other countries and the occurrence is particularly critical in accomplishing some activities in the market. This type of strategy is usually by big firms such as Toyota, Nokia etc which have massive FDI centered operations about the world.

Another strategy is named the collaboration strategy which can be involved with the company creating an ally with companions either up or down or the same level of the value string, for example, licensing and franchising.

Franchising is a way of marketing goods and services where the franchiser grants or loans the right to use branding, trademarks, products and the technique of procedure is transferred to a third party the franchisee in substitution for a franchise price. Doole and Lowe (2001)

International strategic alliances-This will involve an exporting organization going into tactical alliances with local businesses in the targeted countries. This strategy is categorized into three varieties.

Non equity strategy alliance that is produced through the contractual agreement to provide, produce or spread the companies' goods or services with collateral sharing. This may concern marketing and information sharing e. g. licensing and franchising.

An equity tactical alliance is the strategy in which partners own different percentages of equity in a fresh venture or task or a preexisting firm.

Joint Ventures where two or more firms create another co-operation whose stock is shared by partners. Cateora and Graham(2002) specify a joint venture as partnership between several participating companies that join forces to make a independent legal entity. Joint Projects are in essence a way of risks of broadening internationally.

Acquisition is" where an organization develops its resources and competencies by firmly taking over another company"Johnson and Scholes (2002 p. 375). An acquisition can be instantaneous and sometimes less expensive method of market entry. Keegan and Schlegelmilch (2001).

Other strategies a firm may use are

The use of the web by establishing a website to advertise its products and or services to the globe. This method hasn't only become popular because of the cost efficiency but also as a result of instant huge amounts it reaches. The web provides the methods to export some types of services, ranging from airline tickets to architectural services.

Other facilities upon this method include online advertising and catalogues where goods can be, determined, ordered and payed for remotely. This method however may connect with both autonomous and collaborative strategies.

Thus, different types of international strategies signify different levels of resources, commitments and hazards. There are a variety of questions managers must put into thought before selecting an entrance strategy directly into a fresh market or country. The questions that require to be considered are such as what exactly are the goals and aims of the company, does the organization have sufficient resources and capabilities to survive in the market especially in a foreign country where the firm could find stiff competition. Additionally it is very important that the company does it's home work and recognizes its competitors in the market, unique conditions in the targeted country, managing risk and go back, competencies of the firm and characteristics of the merchandise or services that the firm whishes to export.

The firm can also decide whether they want to work with direct export or indirect exporting.

Direct Exporting is the strategy a firm can use to sale directly to the clients in international countries by starting an export sales department which can create opportunities for the organization to establish a closer relationship with the overseas market and the finish buyers. The organization can decide to use an export manager who will be demand of its direct export sales abroad to some countries where you can sale right to the end customer. This is common in the Middle East, Central America and in some Asian Countries. Organizations wishing to follow a permanent position in a international market need to be more proactive in their method of the market admittance by becoming immediate involved. Other immediate export options are the use of export intermediaries.

Indirect Exporting is the other strategy that may be used by organizations to export it products and or services. Indirect exporting may appear to be the better option to other businesses through using intermediaries may be a better alternative looking at the complex responsibilities and risks involved in direct exporting. In this strategy, the company can decide to use the local Intermediaries that is capable of doing general market trends and create a marketing strategy on behalf of the company.

Advantages of Exporting:

The following are the benefits of exporting as a global entry technique for a new organization;

Increased sales size resulting in much better market share as well the technology of profit margins that tend to be more advantageous than the domestic market,

Increased economies of size through the reduction of unit cost of manufacturing as the sales quantities rise

A varied customer bottom part thus reducing reliance on home marketplaces.

Minimized risk and maximized overall flexibility in comparison to other access strategies as the firm can certainly and quickly withdraw from an export market.

Lower cost of overseas market entry as the firm doesn't have to purchase the mark market or maintain physical existence especially by using agencies or franchises. The firm can therefore test the new market before committing increased resources through international direct investment.

It helps stabilize fluctuations in sales associated with economic cycles or seasonality of demand e. g. a firm can offset declining demand at home.

In a nutshell the reduced cost, low risk character of exporting, combined with capacity to leverage on overseas lovers makes exporting ideal to a new organization in the international business fraternity.

Disadvantages of Exporting:

Because exporting does not require the presence of the organization in the united states it is exporting its goods or services, the organization usually does not talk with its customers therefore it does not get to learn about the pursuits of its clients, the opponents and the market.

It does not allow the company to benefit from the location features of the host countrywide.

The exporting firm has limited opportunities to gain understanding of local market segments and competitors as it does not dwell in the target market's countries, hence posing a small business risk.

There is serious exchange hazards involved as the company deals in forex anticipated to fluctuations in trade rates. Without proper hedging, the business may encounter significant exchange deficits with respect to the monetary situation of the target foreign market and apart from losses, exchange rates may cause the exporters goods being expensive in the mark market and for that reason lose market talk about in the host national.

The exporting corporation is subjected to trade barriers such as transfer duties/tariffs depending on the area of the host national whom it deals with. The presence of certain regional groupings may affect the exporting firm positively or negatively especially if the firm is from beyond your region.

Exporting usually entails carrying goods for production companies involved with goods marketing and distribution. This can be a constraint in the soft syndication and realization of business goals of economic progress and profit era. This might also depend on the positioning of the target market and the socio-economic situation in the number nations as well as infrastructural development.

The idea that the exporting organization does not dwell in the number country may cause limitations on the capability to reply quickly to customer demands as there may be no one from the firm on the ground to respond promptly.

Exporting may create reliance on export intermediaries and therefore may not possess the grip.

Another disadvantage of exporting is the high travelling costs that can make exporting uneconomical especially if the organization is exporting huge or bulk products.

Conclusion:

It can be figured a crucial facilitator of internationalization of marketplaces depends on three components as market drivers this is the presence of similar customer needs and preferences, the presence of global customers e. g. the growing trend in car components companies being internationalized as their customers become internationalized. In accordance to Yip (2003) costs may be reduced by working internationally through increasing volumes beyond just what a countrywide market may support and therefore can give surge to economies of range both on the creation as well as on the purchasing area. Scale economies are especially important in industries with high product development costs. In addition, it observed that internationalization is advertised were you'll be able to take good thing about country specific variances. Other drivers may be due to insurance plan including tariff barriers, subsidies to local businesses and license to trade.

Therefore among the techniques of internationalization, exporting has became more popular using types of business functions and largely is determined by what stage a particular firm is along the way of internationalization. Typically this method is utilized by businesses in the initial phases of internationalization especially by small and mid-sized companies (SMEs) and strategy becomes less popular as businesses grow in proportions.

The two main strategies organizations use to export is firstly by cooperation, where a firm switches into partnerships with other businesses either locally or abroad to complete value chains in the business through joint endeavors, licensing, franchising and other strategic alliances.

The second strategy is the go it together or autonomous strategy were a company going into export through the establishment of its own infrastructure in the mark market like a distribution office, its own employees. Therefore this strategy involves the international immediate investment (FDI) with a view to creating a permanent commitment in the overseas market included. However, it is less popular especially for firms taking place the international market for the first time.

Through evaluation of the export strategy, the technique offers a lot of negatives despite getting a lot of advantages and therefore the choice of using for internationalization will depend on various factors such as being an access strategy, or depending on financial conditions of a particular region, take good thing about market conditions prevailing at a specific time. This is after taking into account the many factors or individuals such as costs, competition, market condition and local and web host government regulations.

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