If a business intends to make a significant impact in terms of exporting it is essential that a well-considered and effective export strategy is developed which will reflect the changing nature of the international trade market. Arising from the establishment of the World Trade Organisation, are some significant issues, one of which is the importance of implementing an export strategy in order to expand the reach of small to medium sized businesses. However, in their eagerness to expand business potential through exporting, managers can often be guilty of allowing their thoughts to drift prematurely to questions of marketing, distribution or pricing. This can lead to later difficulties, however, because it allows some of the more foundational questions to remain unanswered. This article outlines the 3 secrets to developing a good export strategy which must be considered before any such thinking takes place.
- Developing an Export Infrastructure
Lack of infrastructure within or around the target context is one of the most significant hurdles to overcome in seeking to develop exports. Depending on the nature of the business, an effective export strategy will, therefore, acknowledge and address such issues as industrial estate potential, export processing zones, bonded production centres or, in less developed countries, such issues as roads, ports, shipping, electrical capacity, telecommunication potential, and so on. Before an export strategy can develop any further, infrastructure issues must be addressed in full.
- Improving Financial Conditions
In today’s global market conditions, production expansion relies heavily on accessing capital, particularly for businesses which lack collateral or are considered high-risk borrowers. Before such things as marketing, pricing or distribution can even be considered, realistically addressing the issue of financial provision is of paramount importance. An effective export strategy will outline in extensive detail how financing will work in both the short to medium terms.
- Strengthening Market Channels
It can be the case that an existing market is not yet ready to allow a new enterprise to develop marketing relationships within it. The International Trade Forum Magazine have expressed that as a result of this issue, many businesses can struggle to export effectively because they lack appropriate knowledge of market channels or have failed to establish market networks and face-to-face relationships with potential customers. A good export strategy will, therefore, detail how a business might utilise any existing channels including, for example, those offered by trading houses or joint marketing consortia, which can provide further channels between producers and providers dealing in such areas as packaging, shipping, financing, insurance and publicity. Seeking relationships with sub-contractors can also improve access to existing market channels. Some market zones actively promote such sub-contractual arrangements to this end. Singapore and the Republic of South Korea, for example, have developed programmes to increase the capacity of small foreign enterprises to build their market channels through sub-contractors in order to make them more attractive to larger firms. Acknowledging the nature of the market and identifying strategies to strengthen market channels is an essential characteristic of an effective export strategy.
It is clear, therefore, that before any concrete business arrangements can be put in place, an effective export strategy, built upon sound and thorough research of the potential export infrastructure, the financial conditions and the market channels must be developed and implemented.