Building an Export Strategy
Building an Export Strategy
Many firms enter into exporting by accident rather than by design. When that happens, firms tend to encounter a number of unforeseen problems. In addition, the firm may never get a chance to see how important exports could be. That is why it is important to develop a good export strategy. Before developing the strategy, however, the firm must understand some of the major problems that firms face in exporting.
Potential Pitfalls Aside from problems that are common to international business in general and are not unique to exporting, such as language and other culturally related factors, 10 mistakes are frequently made by firms new to exporting:
1. Failure to obtain qualified export counseling and to develop a master international marketing plan before starting an export business.
2. Insufficient commitment by top management to overcome the initial difficulties and financial requirements of exporting.
3. Insufficient care in selecting overseas agents or distributors.
4. Chasing orders from around the world instead of establishing a basis of profitable operations and orderly growth.
5. Neglecting export business when the U.S. market booms.
6. Failure to treat international distributors on an equal basis with domestic counterparts.
7. Unwillingness to modify products to meet other countries' regulations or cultural preferences.
8. Failure to print service, sales, and warranty messages in locally understood languages.
9. Failure to consider use of an export management company or other marketing intermediary when the firm does not have the personnel to handle specialized export functions.
10. Failure to consider licensing or joint venture agreements. This factor is especially critical in countries that have import restrictions.28
Another problem faced by exporters relates to the changing nature of governmental policy. Although the government can provide incentives for firms, it also can withdraw those incentives at any time. The budget cuts in the United States in the late 1980s and early 1990s created a real problem for some of the U.S. government agencies supposed to provide export services. A shortage of personnel made it difficult for them to do a good job.
Strategy Design The design of a strategy involves a series of steps. First, a firm must assess its export potential. This involves taking a look at opportunities and resources. It would not be smart to make commitments to export if the firm did not have the production capacity to deliver the product.
Next, the firm must obtain expert counseling. For U.S. firms the best place to start is with the International Trade Administration (ITA) office of the U.S. Department of Commerce in the exporter's area. Such assistance is invaluable in helping the exporter get started. In the opening case, for example, Robertson used a lot of information provided by the U.S. government to learn about the U.S. market, and Pratt acquired a market research publication funded by the New Zealand Export-Import Corporation that included research on the U.S. flower market. In addition, the Small Business Administration can be useful in helping the firm to develop an export business plan and secure financing. As the export plan increases in scale, the exporter probably will want to secure specialized assistance from banks, lawyers, freight forwarders, export management companies, export trading companies, and others.
The next important step is to select a market or markets. This step often occurs by default if the exporter is responding to requests from abroad that result from trade shows, advertisements, or articles in trade publications. However, the firm must pick a market or markets in which to concentrate a push strategy. It should learn how to deal with foreign consumers. Because of differences in national markets, it is best to focus on a few key markets rather than try to develop global expertise all at once.
Once the markets have been targeted and the decision has been made to expend company resources in the export effort, the firm should formulate an export strategy, which usually involves dealing with the following four factors: (1) export objectives, both immediate and long term; (2) specific tactics that the firm will use; (3) a schedule of activities and deadlines that will help the firm achieve its objectives; and (4) the allocation of resources to accomplish the different activities.
Finally, the firm needs to determine how it will get the goods to market. The key in the export plan is to approach exporting from an organized point of view rather than just to sit back and let it happen.
Many firms enter into exporting by accident rather than by design. When that happens, firms tend to encounter a number of unforeseen problems. In addition, the firm may never get a chance to see how important exports could be. That is why it is important to develop a good export strategy. Before developing the strategy, however, the firm must understand some of the major problems that firms face in exporting.
Potential Pitfalls Aside from problems that are common to international business in general and are not unique to exporting, such as language and other culturally related factors, 10 mistakes are frequently made by firms new to exporting:
1. Failure to obtain qualified export counseling and to develop a master international marketing plan before starting an export business.
2. Insufficient commitment by top management to overcome the initial difficulties and financial requirements of exporting.
3. Insufficient care in selecting overseas agents or distributors.
4. Chasing orders from around the world instead of establishing a basis of profitable operations and orderly growth.
5. Neglecting export business when the U.S. market booms.
6. Failure to treat international distributors on an equal basis with domestic counterparts.
7. Unwillingness to modify products to meet other countries' regulations or cultural preferences.
8. Failure to print service, sales, and warranty messages in locally understood languages.
9. Failure to consider use of an export management company or other marketing intermediary when the firm does not have the personnel to handle specialized export functions.
10. Failure to consider licensing or joint venture agreements. This factor is especially critical in countries that have import restrictions.28
Another problem faced by exporters relates to the changing nature of governmental policy. Although the government can provide incentives for firms, it also can withdraw those incentives at any time. The budget cuts in the United States in the late 1980s and early 1990s created a real problem for some of the U.S. government agencies supposed to provide export services. A shortage of personnel made it difficult for them to do a good job.
Strategy Design The design of a strategy involves a series of steps. First, a firm must assess its export potential. This involves taking a look at opportunities and resources. It would not be smart to make commitments to export if the firm did not have the production capacity to deliver the product.
Next, the firm must obtain expert counseling. For U.S. firms the best place to start is with the International Trade Administration (ITA) office of the U.S. Department of Commerce in the exporter's area. Such assistance is invaluable in helping the exporter get started. In the opening case, for example, Robertson used a lot of information provided by the U.S. government to learn about the U.S. market, and Pratt acquired a market research publication funded by the New Zealand Export-Import Corporation that included research on the U.S. flower market. In addition, the Small Business Administration can be useful in helping the firm to develop an export business plan and secure financing. As the export plan increases in scale, the exporter probably will want to secure specialized assistance from banks, lawyers, freight forwarders, export management companies, export trading companies, and others.
The next important step is to select a market or markets. This step often occurs by default if the exporter is responding to requests from abroad that result from trade shows, advertisements, or articles in trade publications. However, the firm must pick a market or markets in which to concentrate a push strategy. It should learn how to deal with foreign consumers. Because of differences in national markets, it is best to focus on a few key markets rather than try to develop global expertise all at once.
Once the markets have been targeted and the decision has been made to expend company resources in the export effort, the firm should formulate an export strategy, which usually involves dealing with the following four factors: (1) export objectives, both immediate and long term; (2) specific tactics that the firm will use; (3) a schedule of activities and deadlines that will help the firm achieve its objectives; and (4) the allocation of resources to accomplish the different activities.
Finally, the firm needs to determine how it will get the goods to market. The key in the export plan is to approach exporting from an organized point of view rather than just to sit back and let it happen.
Comments
Post a Comment