These factors might also seriously impact profits made in the market. In these situations, organizations should consider another strategy.ĭepending on the market selected, the distance goods must be transported and the means of transportation, direct exporting can make goods too expensive for customers to purchase. If the target market has different regulations, legal systems, cultures or ways of conducting business, and the organization is inexperienced in international trade, direct exporting might be very difficult and risky. To appropriately promote and price goods and services, considerable time must be spend researching the market.ĭirect exporting can be very successful if the selected market is readily accessible and has similar regulations and customs to the organization’s country. These tasks are time consuming and require skill to perform correctly-mistakes can result in serious business losses. Although not all will have the necessary resources in terms of skills, knowledge and finances. Direct exporters must make the export sale, arrange for shipping and insurance, organize permits and licences, prepare all the paperwork and process the letter of credit that provides for payment. An organization of any size can start direct exporting activities. The inability to rely on intermediaries, who will be representing other organizations and may not operate in the best interests of the exporting organization When is direct exporting a suitable strategy?ĭirect exporting is a simple entry strategy, potentially suitable for organizations wanting to expand their market share or maximize profits. The difficulties the exporting organization will have when the domestic currency is very strong against the target market’s currency.The difficulties breaking into target markets in trade blocs.A lack of exporting skills and experience leading to expensive errors.The need to invest significantly in researching market information and preparing marketing strategies.Organizations should consider the following disadvantages: However, direct exporting can be difficult, especially for organizations new to international trade. Can obtain in-depth information about trade in the target market, enabling it to make future decisions about whether to invest in facilities in the market.Can withdraw from the market relatively cheaply and easily, if needed.
poor production standards, use of child labour) and the risks associated with political instability in a foreign market Controls all its manufacturing processes, which are based in its facilities, thus avoiding the risks associated with production overseas (e.g.Advantages and disadvantagesĭirect exporting as a market entry strategy has its advantages. Some of the most important customers for direct-exporting organizations include importers, wholesalers, distributors, retailers, government procurement departments and consumers themselves.
Even if an intermediary is involved, the export is still direct because the intermediary is a customer based in the target market.
Organizations can sell to a wide range of customers, some of whom act as intermediaries in the target market. What is direct exporting?ĭirect exporting involves an organization selling goods directly to a customer in an international market.
#Venture forthe consumer directed how to
Want to learn more about how to select the most advantageous market entry strategy for your international venture? FITTskills Planning for International Market Entry online workshop. Which one, if either, would make the most sense for your business? Two of the most popular strategies are direct and indirect exporting.
#Venture forthe consumer directed full
The range of elements to consider might seem daunting, but without a full analysis of the situation for each potential market, an organization might select an inappropriate strategy. To select the best strategy, organizations must consider the markets they have selected, the products or services they wish to sell and their overall aims for international trade. Different markets and industries require different approaches. With so many options for market entry, it can be difficult for organizations to decide which strategy will be the most successful at meeting their objectives.
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