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Datamatrix – Assessing Your Export Potential

Suite 404

ASSESSING YOUR EXPORT POTENTIAL


Determining Your Products' Export Potential

Assessing Your Company's Export Readiness

Developing an Export Plan

Management Issues in the Export Plan

404.01 DETERMINING YOUR PRODUCTS' EXPORT POTENTIAL

There are several ways to evaluate the export potential of your products and services in overseas markets. The most common approach is to examine the success of your products domestically. If your company succeeds at selling in the domestic market, there is a good chance that it will also be successful in markets abroad, at least those where similar needs and conditions exist.

Another means to assess your company's potential in exporting is by examining the unique or important features of your product. If those features are hard to duplicate abroad, then it is likely that you will be successful overseas. A unique product may have little competition and demand for it might be quite high.

Finally, your product may have export potential even if there are declining sales in the domestic market. Sizeable export markets may still exist, especially if the product once did well in the domestic but is now losing market share to more technically advanced products. Other countries may not need state-of-the-art technology and/or may be unable to afford the most sophisticated and expensive products. As an example, such markets may have a surprisingly healthy demand for U.S. products that are older or considered obsolete by U.S. market standards

404.02 ASSESSING YOUR COMPANY'S EXPORT READINESS

Answering these general questions about how exporting will enhance into your company's short, medium and long-term goals will help determine your company's readiness to export:

What does the company want to gain from exporting?

  • Is exporting consistent with other company goals?
  • What demands will exporting place on the company's key resources, management and personnel, production capacity, and finance and how will these demands be met?
  • Are the expected benefits worth the costs, or would company resources be better used for developing new domestic business?

The next step is to more closely examine the impact of exporting on your company.

These questions will help you analyze the decision to export.

404.03 DEVELOPING AN EXPORT PLAN

Once you have decided to sell your products abroad, it is time to develop an export plan. A crucial first step in planning is to develop broad consensus among key management on the company's goals, objectives, capabilities, and constraints. (Answering the questions above is one way to start.) In addition, all aspects of an export plan should be agreed upon by the personnel involved in the exporting process, as they will ultimately execute the export plan.

The purposes of the export plan are:

(a) to assemble facts, constraints, and goals and

(b) to create an action statement that takes all of these into account. The statement includes specific objectives, it sets forth time schedules for implementation, and it marks milestones so that the degree of success can be measured and help motivate personnel.

The following questions should ultimately be addressed:

  • Which products are selected for export development?
  • What modifications, if any, must be made to adapt them for overseas markets?
  • Which countries are targeted for sales development?
  • In each country, what is the basic customer profile?
  • What marketing and distribution channels should be used to reach customers?
  • What special challenges pertain to each market (competition, cultural differences, import controls, etc.), and what strategy will be used to address them?
  • How will the product's export sale price be determined?
  • What specific operational steps must be taken and when?
  • What will be the time frame for implementing each element of the plan?
  • What personnel and company resources will be dedicated to exporting?
  • What will be the cost in time and money for each element?
  • How will results be evaluated and used to modify the plan?

The first time an export plan is developed, it should be kept simple. It need be only a few pages long, since important market data and planning elements may not yet be available. The initial planning effort itself gradually generates more information and insight. As the planners learn more about exporting and your company's competitive position, the export plan will become more detailed and complete. (See also the Fifth Floor for information about market research).

From the start, the plan should be viewed and written as a management tool, not as a static document. Objectives in the plan should be compared with actual results to measure the success of different strategies. The company should not hesitate to modify the plan and make it more specific as new information and experience are gained.

A detailed plan is recommended for companies that intend to export directly. Companies choosing indirect export methods may require much simpler plans.

404.04 MANAGEMENT ISSUES IN THE EXPORT DECISION

Management Objectives

  • What are the company's reasons for pursuing export markets?
  • Are they solid objectives (e.g., increasing sales volume or developing a broader, more stable customer base) or are they frivolous (e.g., the owner wants an excuse to travel)?
  • How committed is top management to an export effort?
  • Is exporting viewed as a quick fix for a slump in domestic sales?
  • Will the company neglect is export customers if domestic sales pick up?
  • What are management's expectations for the export effort?
  • How quickly does management expect export operations to become self-sustaining?
  • What level of return on investment is expected from the export program?

Experience

  • With what countries has business already been conducted, or from what countries have inquiries already been received?
  • Which product lines are mentioned most often?
  • Are any domestic customers buying the product for sale or shipment overseas? If so, to what countries?
  • Is the trend of sales and inquiries up or down?
  • Who are the main domestic and foreign competitors?
  • What general and specific lessons have been learned from past export attempts or experiences?

Management and Personnel

  • What in-house international expertise does the firm have (international sales experience, language capabilities, etc)?
  • Who will be responsible for the export department's organization and staff?
  • How much senior management time (a) should be allocated and (b) could be allocated?
  • What organizational structure is required to ensure that export sales are adequately serviced?
  • Who will follow through after the planning is done?

Production Capacity

  • How is the present capacity being used?
  • Will filing export orders hurt domestic sales?
  • What will be the cost of additional production?
  • Are there fluctuations in the annual work load? When? Why?
  • What minimum order quantity is required?
  • What would be required to design and package products specifically for export?

Financial Capacity

  • What amount of capital can be committed to export production and marketing?
  • What level of export department operating costs can be supported?
  • How are the initial expenses of export efforts to be allocated?
  • What other new development plans are in the works that may compete with export plans?
  • By what date must an export effort pay for itself?

Please see ‘ Acknowledgements ' for sources of research

AID TO TRADE
UNDERSTANDING TRADE
WHAT IS TRADE?
THE ORIGIN OF TRADE
THEORY OF INTERNATIONAL TRADE
ORGANIZATION OF TRADE
CURRENCY AND THE TRADING LANGUAGE
THE HISTORY OF CURRENCY
CURRENCY A UNIT OF EXCHANGE
THE LANGUAGE OF INTERNATIONAL TRADE
IMPORT / EXPORT TERMINOLOGY
TRADE ETHICS, TRENDS AND POLICIES
ETHICAL TRADING
RISKS AND REWARDS
ECONOMIC TRADE POLICIES
AGENCY FOR INTERNATIONAL DEVELOPMENT
GETTING STARTED
EXPORTING ? THE START
ASSESSING YOUR EXPORT POTENTIAL
PREPARING YOUR PRODUCT FOR EXPORT
PRICING, QUOTATIONS AND TERMS
MARKETING
MARKET RESEARCH
MARKET INFORMATION
MARKET ENTRY
THE MARKETING PLAN
STRATEGY, PORTS AND WAREHOUSES
EXPORT LICENCE
IMPORTING
AN EXPORT STRATEGY
SHIPPING
DOCUMENTATION, FOOD, DRUG AND ENVIRONMENT
DOCUMENTATION
BONDED WAREHOUSE
LEGAL CONSIDERATIONS
FOOD, DRUG & ENVIRONMENT
PAYMENT, CREDIT AND FINANCE PROGRAMS
METHODS OF PAYMENT
EXPORT CREDIT
EXPORT FINANCE PROGRAMS
EXPORT FINANCE PROTECTION
REPRESENTATION AND INTELLIGENCE
TRADE ASSISTANCE PROGRAMS
OFFSHORE REPRESENTATION
EXAMPLE FORMS
INTELLECTUAL PROPERTY
THE PENTHOUSE - INTERACTION
FINANCE
THE DIRECTORS CLUB
THE CONFERENCE ROOM
THE SITE?S BONUS FEATURES


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