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.
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.
Ways of Exporting
The company can decide to export directly or indirectly to a foreign country.
Direct selling in Export Strategy
Direct selling involves sales representatives, distributors, or retailers who are located outside the exporter's home country. Direct exports are goods and services that are sold to an independent party outside of 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

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