Decision to Export
Effort
Understanding what is involved in beginning to export your company's products is vital. There are many nuances to this alternative as well as many benefits. However, the learning curve can make for costly mistakes. Every executive decision maker should have a base understanding of the commitment to facilitate export transactions.
- Staff: Your organization will need staff members to facilitate the marketing, organize any needed export inspections, produce export documentation, facilitate shipping and work with financial instruments. This potentially could mean the addition of workers in marketing, operations, shipping and finance departments. There is overhead associated with this including payroll, taxes, insurances, and other benefits. Your existing staff could be working with the risk of diluting their primary functions potentially impacting existing business. There is also an associated learning curve when training existing or new employees. Experienced candidates are also expensive as their knowledge demands a higher wage.
- Marketing Sources: Investments of budget, time and research are involved when identifying who the target customer candidates are in each foreign market. Knowledge is needed of country specific information regarding the potential customers, competitive products, product-to-market matching and import restrictions/duties/tariffs.
- Marketing Expenses: There will be associated expenses with the actual marketing activities. These include international telephone calls, airmail postage expenses, overnight shipping expenses, sample costs, and the creation of marketing brochures.
- Inconveniences: Many times there are phone conversations necessary to negotiate the transactions and terms. These occur during the customer's working hours. Many times that is in the middle of the night for U.S. time zones.
- Understanding Cultures: Each country has specific cultural customs that can impact the transaction. Knowing how to interact with each target customer base can be the difference in success and failure in these efforts. Very few countries do business in the same manner as the U.S. Forcing our expectations and customs on them can ensure losing a sale.
- Logistics: Understanding the transaction logistics is a necessity. Knowing which ports provide the best shipping arrangements; where the free trade zones in your target market are located; timing the shipment with the transportation is critical. Knowing how to avoid demurrage throughout the drayage process is important.