Exporting increases sales of goods through creating a platform of market growth for small companies. It is a way of expanding to new regions and meeting customers’ needs, both locally and internationally, to cover a wide range of markets and increase market share that as a result generates more sales and profitability of the company. Exporting goods to other countries reduces the risk of fluctuations in the local market and gives the company an advantage of exploiting various foreign markets. Therefore, the risk of low sales in one market may be offset by increased sales in another market balancing the income of the company for its survival.
Exporting also enables small companies to enjoy economies of scale by spreading the cost of production over a wide volume of revenue. The companies will be able to increase profitability through reducing the average unit cost when it expands into foreign markets (Da Costa, 2016). Export companies grow faster than non-exporting companies, enjoy high profits and survive in the business longer.
Da Costa, E. (2016). Global e-commerce strategies for small businesses. Mit Press.
Tansu, A., & Kaynak, E. (2013). An empirical investigation of the differences between initiating and continuing exporters. Asia Pacific International Journal of Marketing.
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The most obvious reason a smaller firm would want to start exporting would be to benefit of the larger revenue and profits. The global market provides so much more untapped opportunity then one’s domestic market. A smaller firm can benefit by achieving economies of scale, thereby lowering its cost. Firms need to be proactive in entering into global markets. Common pitfalls include poor market analysis, a poor understanding of competitive conditions in the foreign market, a failure to customize the product offering the needs of foreign customers, a lack of an effective distribution program, a poorly executed promotional campaign, and problems securing financing. Many firm’s never reach their potential in other countries by being separated by culture, language, distance, and time. To overcome these obstacles you must familiarize yourself with the country. Ways to overcome these possible pitfalls is to be familiar with the foreign market you are entering, be prepared with the time you will need to invest in learning about the market. Hire a management team with the expertise needed to handle the business within the foreign markets. The main thing you needed will be knowledge.
Hill, Charles W.L. International Business: Competing In the Global Marketplace. McGraw-Hill. New York. 10 edition. 2015. Print
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