What should I consider when making the decision to begin exporting?

How do I begin?

Before exporting or expanding into foreign markets, it is important to first assess the firm's management capabilities. Decide whether the dedicated personnel, resources, and management support are strong enough to complete numerous export transactions. Then it is necessary to conduct appropriate research to select a target market or markets that will be profitable. After researching, develop an export business plan which will allow management to anticipate the future and better understand the company so that informed decisions may be reached. Included in this plan will be a rationale for selecting a particular foreign market which answers the following questions:

Analysis of Domestic Performance

Why is the business successful in the domestic market?

What is the current domestic market share of the product?

Firm's Commitment and Desire to Export

What are the firm's objectives in exporting?

At what level in the firm's hierarchy are exporting decisions made?

Who on your staff will be involved with the export process?

What international experience does management (or any of its employees) have?

What level of involvement in the export process is the firm willing to have?

How much risk is the firm willing to take on?

Competitive Analysis

What makes the firm's products or services competitive in a foreign market?

What makes the products or services unique?

What are the firm's overall competitive advantages (e.g., technology, patents, skills)?

Finding Out About Targeted Foreign Markets

What market segments are being targeted?

How is the firm's competition performing in international markets?

Will the product or service be restricted due to tariffs, quotas, or other non-tariff barriers?

Will patent/trademark protection abroad be essential for your product?

What product labeling requirements must be met?

What sort of target market environmental regulations need to be adhered to?

Manufacturing and Distributing the Product

Will the product be suitable for overseas distribution?

Will the product be subject to national health or product safety regulations?

Will the product require local service, supplies, or spare parts distribution capability?

Will the product require redesign to be saleable overseas?

What export packaging considerations need to be addressed?

Does the present manufacturing operation have the capacity to handle the anticipated level of export orders?

Marketing the Product

How will the product or service be advertised?

What companies, agents, or distributors have purchased similar products?

Will an agent or distributor be appointed to handle the export market?

What territory should the agent or distributor cover?

Is there a trade show or trade mission that will best highlight your product or service?

Will the product/service be sold under the same name in the foreign target market?

Pricing and Commercial Terms

How will a price be calculated?

What are your service terms?

What are your payment terms? Credit terms?

What are your warranty and guarantee terms?

What are your discount terms?

Financial/Risk Management Issues

Can the investment and working capital requirements for the export operation be funded from internal resources?

What additional funding sources are available to augment internal capital?

Does management have the resources to manage the financial risks associated with exporting?

Many of these issues will be revisited in greater detail as the company conducts more specific product market research and begins to refine its export strategy. In completing this self-analysis, company management should also identify areas where external advice is needed as well as potential sources of external assistance, including trade facilitation organizations (government and private sector) and trade service providers.

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