EXPORT OPPORTUNITIES FOR STARTUP MICRO,SMALL & MEDIUM ENTERPRISES : EXPORT OPPORTUNITIES FOR STARTUP MICRO,SMALL & MEDIUM ENTERPRISES By
Adrian Singh
www.exportcourse.com Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 1
Presentation Outline : Presentation Outline Benefits of Exporting
Questions to be addressed when deciding to start exporting
Challenges faced by Exporters
Is your Company Export Ready
The Export Planning Process
Stages in export development
Market entry strategies
Most Favorably Market Selection
Cooperative Exporting
Positioning Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 2
Opening Statements : Opening Statements The international Market is Ruthless, Selective and Fiercely Competitive.
“Exporting Is A Process Not A Transaction”.
Import/Export procedures can be significant non-tariff barriers to trade. This can add up to a significant cost and time consuming, particularly in the developing countries.- UNCTAD Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 3
Opening Statements : Opening Statements Generally, no matter what product you produce, there is an export market available. However, there may be several hurdles to cross before your product can export-ready. Quality and cost considerations are paramount. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 4
Benefits of Exporting : Benefits of Exporting More than ever before, it is clear today that world trade is essential to the growth of most companies. This is especially true for small businesses with the advent of increased foreign competition at home. Entering the overseas marketplace offers exciting opportunities to increase company sales and profits. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 5
Benefits of Exporting : Benefits of Exporting The advantages that can accrue from exporting are significant:
Increased profits and sales
Additional markets and customers – spreading risk.
Increased product/service life cycle
Offset lack of demand for seasonal products
Utilizing excess capacity to Lower costs
Better utilization of company personnel
Increased productivity
Accessing new technology for overseas markets
Additional product/service lines Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 6
Questions to be addressed when deciding to start exporting : Questions to be addressed when deciding to start exporting Which products? What adaptations if necessary?
Which countries to target?
In each country, design the 4 P’s.
What special challenges pertain to each market, and what strategies to address them.
What operational steps to be taken and when.
What is the time frame for implementing each element of plan.
What personnel and company resources to be used.
What will be the cost in time and money for each element.
How will results be evaluated. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 7
In developing an export business, there will be... : In developing an export business, there will be... Challenges to overcome eg. Risk, adaptation of product, price determination, logistics.
Attitudes to overcome eg. Not meeting deadlines, inadequate after sales service, global mindset.
Resources needed eg. Production capacity, financial capacity, adequate organization. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 8
Challenges facing the Exporter : Challenges facing the Exporter Broad Problems
Market Access
Getting the product ‘fit’ right for the market.
Capacity to cope with the strenuous demands of the International Market
Facing off with international brands
Finding the ‘right’ distributor. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 9
Is your company export ready? : Is your company export ready? Evaluating Your Strengths and Weaknesses
Any company considering entering the export market will have to assess its strengths and weaknesses. Consider these eight key aspects of your business:
Management Expertise
Production Resources
Product Design And Ability To Adapt
Domestic Market Success
Marketing Skills
Technology
Financial Resources
People Resources Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 10
Export Planning Process : Export Planning Process Level 1 – Strategic Plan
Level 2 – Business Plan
Level 3 – Marketing Plan
Level 4 – Sales Plan
Level 5 – Area Plan
Level 6 – Account Plan
Level 7 – Activity Plan Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 11
Export Planning Process : Export Planning Process GOALS must be SMART S – Specific
M – Measurable
A – Achievable
R – Resources
T – Time Bounded Action Plans must have OATS O – Objectives
A – Activities and Strategies
T – Time Frames
S – Schedule specific (Who, what, when, how) Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 12
7 Stages in Exporting : 7 Stages in Exporting The company does not want the extra burden of export. It facilitates the occasional export order. Its more a hassle.
The company continues to process occasional export orders but does not look for more. There is no product adaptation.
The company begins to seriously study the feasibility of developing export department.
The company begins exports experimentally to a few markets. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 13
7 Stages in exporting : 7 Stages in exporting 5. The company uses the experience in stage 4 to develop skills needed to successfully export.
6. Based on this experiment, it selects the most appropriate markets and applies international marketing techniques tailored to meet the needs of each market.
7. The company goes regional then global.
What stage is your company at? Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 14
Market Entry Strategies : Market Entry Strategies First, you must decide which of the following exporting strategies to use:
1. Indirect exporting. A firm using indirect exporting employs a domestic intermediary, such as an export management or trading company, to solicit business, arrange financing and ship goods. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 15
Market Entry Strategies : Market Entry Strategies 2. Direct exporting. With direct exporting, a company handles all of its own market research, financing, export licensing, sales promotion and shipping. It does, however, hire an agent or a distributor to sell directly to consumers overseas.
3. Joint venture. With the joint venture option, a licensing agreement is drawn up between the exporting firm and the foreign company. Both share costs, responsibilities, rights and profits from sales of the product or service. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 16
Most Favourable Market (Market Selection) : Most Favourable Market (Market Selection) Questions to ask:
Is the product suitable?
Will the price be competitive?
Can the company provide back-up service and sales support needed?
What, if any, minimum stock levels required?
What payment terms are reasonable? Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 17
Most Favourable Market (Market Selection) : Most Favourable Market (Market Selection) 6. Are resources available for market to be visited regularly and to support the market?
7. Most important. How much can the appointed representative reasonably be expected to earn and would it be commensurate with the representative’s time 9and possibly money) investment, allowing for the buildup and consolidation period? Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 18
Most Favourable Markets – Some important considerations : Most Favourable Markets – Some important considerations Trade agreements between countries – this would affect the import duties and landed cost in target market.
Non-Tariff barriers – Trade mark registrations, product health and sanitary registrations, importer registrations, ease of import.
Legal framework – is there unfair protection towards the importer.
Political stability.
Currency stability.
If these don’t work favourably, it would be a tough road ahead. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 19
Market Entry through Intermediaries : Market Entry through Intermediaries Types of Intermediaries
Export management Companies/Houses
Distributor
Agents/Representatives Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 20
Coperative Exporting : Coperative Exporting TEAMING UP FOR COMPETITIVE ADVANTAGE
This collective Export effort is called different names in different parts of the world. Some call it export partnership, others call it export club while others call it joint export marketing group. But by whatever name it is called, it comes into existence in view of the complicated and demanding nature of exporting.
In a world of globalization and rapid change, the best route to business goals often involves a partnership
Why are companies teaming up more today than ever before? Because well-constructed corporate alliances help partners pool expertise, enter new markets, share financial risks and get products and services to market faster. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 21
Competitive Advantages from Joint Exporting : Competitive Advantages from Joint Exporting Export joint ventures offer firms the opportunity to reduce costs by capturing economies of scale.
Joint ventures also enable participating firms to spread risks. These benefits are likely to be greatest for small and medium-sized firms that are either new to exporting or have limited export experience.
The ability to reduce export costs and risks is especially important when considering entry into a new or complex export market. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 22
Competitive Advantages from Joint Exporting : Competitive Advantages from Joint Exporting Market Research: firms can join together to share the costs of foreign market research (including hiring expertise), travel, and overseas activities.
Market Development: firms can reduce the average costs of overseas trade shows and missions through joint activities.
Transportation and Shipping: Volume discounts can be negotiated with carriers. Through an export joint venture, firms can guarantee carriers sufficient cargo to make these discounts available. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 23
Competitive Advantages from Joint Exporting : Competitive Advantages from Joint Exporting Pricing Policies: Two or more joint venture partners might agree to establish uniform minimum export prices for particular products in order to avoid price rivalry with each other.
Service and Promotional Activities: Joint venture partners may jointly engage in a variety of activities that will promote or support their combined export sales. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 24
Stumbling blocks to success : Stumbling blocks to success "The most common mistake is a failure up front to clearly articulate the value proposition of the alliance. While it's not vital that each partner's goals be identical, each must be committed to a common outcome.
The right partner is one that complements your own firm's capabilities.
Common missteps include:
Mismatched goals,
Insufficient commitment,
Inability to adjust the relationship to new business realities
Flat out neglect by upper management. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 25
Stumbling Blocks to success : Stumbling Blocks to success It is wise to consider collective exporting and its advantages. The western markets are very complicated to export, Latin markets have restrictive laws and non-tariff barriers, but joining forces with other companies may put you in a better position to succeed. Always ask for help to fine tune the technicalities and provide you with sound consultancy services Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 26
Role of Trade Associations : Role of Trade Associations Every Trade Association or Chamber should provide under listed services amongst others.
Trade related Information
Capacity building & Training
Market research and intelligence
Credibility solution for members
Trade leads
Exhibition and Trade fairs Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 27
Positioning : Positioning Professor Michael Porter proposed three broad alternatives. Being the:
Product differentiator
Low Cost Leader
Nicher
Porter warned, that if firms tried to be good at all three, but not superior in one, they would lose out to firms having superiority in one. Also, trying to be good at all three is extremely costly. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 28
Positioning : Positioning Trying to sell on ‘best price’ alone is dangerous as your market can disappear overnight if a ‘lower cost’ supplier enters the market, or if a supplier with a deep pocket is prepared to sell at a loss long enough to put you out the market. This is not an easy strategy to win with over the long run, but might be a good market entry strategy. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 29
Closing comments : Closing comments In general it is thought that the average company needs about 3 years to consolidate its export activity in any market. Hence, when a company decides to start out in export, it has to commit itself with all the consequences and should not retract in the face of early adversities that may arise, as this would seem like a company being irresponsible in its commercial relations. Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 30
THANK YOU : THANK YOU Visit www.exportcourse.com for Export Courses and Ebooks for all Export Professionals 12/06/2011 31