Exporting, Advantages and disadvantages of exporting, Common Pitfalls of Exporting
Companies that do business in expanding industries must grow to survive. Continuing growth means increasing sales, and a chance to take advantage of the experience curve to reduce the per-unit cost of products sold, thereby increasing profits (Wheelen et al, 2000).
A corporation can grow internally or it can grow externally. Nowadays, growth usually has international implications. A corporation can select from several strategic options the most appropriate method for it to use in entering a foreign market. There are six methods of entering a foreign market; exporting, licensing, franchising, joint ventures, turnkey projects, and wholly owned subsidiaries. Exporting is becoming increasingly popular especially for small businesses because of modern communication, transportation technologies, and gradual decline in trade barriers.
The international market is normally so much larger than the firm 's domestic market that exporting is nearly always a way to increase the revenue and profit base of a company. By expanding the size of the market, exporting can enable a firm to achieve economies of scale, thereby lowering its unit cost (Hill, 2006). Firms that do not export often lose out on significant opportunities for growth and cost reduction (Pope, 2002).
Exporting is sending goods and services from one country to another (Daniels, et al 2006). According to Campbell (et al, 2002), it is the transfer of goods (services) across national borders from the home production facilities.
As said before, exporting is one of the methods to enter foreign markets and it has become a growing trend for companies which are large and small. There are many specific goals by doing this, but the main reason is to guarantee the long-term sustained growth for their business. But like other methods to enter foreign markets, it has advantages and disadvantages. According to Johnson (et al, 2005) and Hill (2006), these can be summarized as follows:
a) Advantages:
*No operational
A corporation can grow internally or it can grow externally. Nowadays, growth usually has international implications. A corporation can select from several strategic options the most appropriate method for it to use in entering a foreign market. There are six methods of entering a foreign market; exporting, licensing, franchising, joint ventures, turnkey projects, and wholly owned subsidiaries. Exporting is becoming increasingly popular especially for small businesses because of modern communication, transportation technologies, and gradual decline in trade barriers.
The international market is normally so much larger than the firm 's domestic market that exporting is nearly always a way to increase the revenue and profit base of a company. By expanding the size of the market, exporting can enable a firm to achieve economies of scale, thereby lowering its unit cost (Hill, 2006). Firms that do not export often lose out on significant opportunities for growth and cost reduction (Pope, 2002).
Exporting is sending goods and services from one country to another (Daniels, et al 2006). According to Campbell (et al, 2002), it is the transfer of goods (services) across national borders from the home production facilities.
As said before, exporting is one of the methods to enter foreign markets and it has become a growing trend for companies which are large and small. There are many specific goals by doing this, but the main reason is to guarantee the long-term sustained growth for their business. But like other methods to enter foreign markets, it has advantages and disadvantages. According to Johnson (et al, 2005) and Hill (2006), these can be summarized as follows:
a) Advantages:
*No operational
References: Agarwal S., and Ramaswami, N. (1992), "Choice of Foreign Market Entry Mode: Impact of Ownership, Location and Internalization Factors", Journal of International Business Studies 23, No.1, p.2-5 Burpitt, W.J., and Rondinelli, D.A Campbell, D., Stonehouse, G., and Houston, B. (2002), "Business Strategy", 2nd Edition, Butterworth & Heinemann, p.210-20 Cavusgil, S.T Daniels, J.D., Radebaugh L.H., and Sullivan D.P. (2006), "International Business", Prentice Hall, p.504-534 Gowthhorpe, C Hill, C.W.L (2006), "International Business", 6th Edition, McGraw-Hill, p.480-505 Johnson, G., Scholes, K Julien, P.A., and Ramagelahy, C. (2003), "Competitive Strategy and Performance of Exporting SMEs", Entrepreneurship Theory and Practice, p.274-94 Ogbuehi, A.O., and Longfellow, T.A Pope, R.A. (2002), "Why Small Firms Export: Another Look", Journal of Small Business Management 40, p.17-26 Wheelen, T.L