A Basic Guide to Exporting - Developing an Export Strategy

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Below is the 1998 version of A Basic Guide to Exporting.
The current edition (2008) is available for purchase at http://unzco.com
Changes in the export industry have occurred in the last decade and are not reflected in the content below.

Developing an Export Strategy

Determining Your Products' Export Potential

There are several ways to evaluate the export potential of your products and services in overseas markets. The most common approach is to examine the success of your products domestically. If your company succeeds at selling in the U.S. market, there is a good chance that it will also be successful in markets abroad, at least those where similar needs and conditions exist.

Another means to assess your company's potential in exporting is by examining the unique or important features of your product. If those features are hard to duplicate abroad, then it is likely that you will be successful overseas. A unique product may have little competition and demand for it might be quite high.

Finally, your product may have export potential even if there are declining sales in the U.S. market. Sizeable export markets may still exist, especially if the product once did well in the United States but is now losing market share to more technically advanced products. Other countries may not need state-of-the-art technology and/or may be unable to afford the most sophisticated and expensive products. Such markets may have a surprisingly healthy demand for U.S. products that are older or considered obsolete by U.S. market standards.

Assessing Your Company's Export Readiness

Answering these general questions about how exporting will enhance into your company's short, medium and long-term goals will help determine your company's readiness to export:

What does the company want to gain from exporting?
Is exporting consistent with other company goals?
What demands will exporting place on the company's key resources, management and personnel, production capacity, and finance and how will these demands be met?
Are the expected benefits worth the costs, or would company resources be better used for developing new domestic business?

The next step is to more closely examine the impact of exporting on your company. The questions in Table 1 will help you analyze the decision to export.

Developing an Export Plan

Once you have decided to sell your products abroad, it is time to develop an export plan. A crucial first step in planning is to develop broad consensus among key management on the company's goals, objectives, capabilities, and constraints. (Answering the questions listed in Table 1 is one way to start.) In addition, all aspects of an export plan should be agreed upon by the personnel involved in the exporting process, as they will ultimately execute the export plan.

The purposes of the export plan are (a) to assemble facts, constraints, and goals and (b) to create an action statement that takes all of these into account. The statement includes specific objectives, it sets forth time schedules for implementation, and it marks milestones so that the degree of success can be measured and help motivate personnel.

At least the following ten questions should ultimately be addressed:

Which products are selected for export development? What modifications, if any, must be made to adapt them for overseas markets?
Which countries are targeted for sales development?
In each country, what is the basic customer profile? What marketing and distribution channels should be used to reach customers?
What special challenges pertain to each market (competition, cultural differences, import controls, etc.), and what strategy will be used to address them?
How will the product's export sale price be determined?
What specific operational steps must be taken and when?
What will be the time frame for implementing each element of the plan?
What personnel and company resources will be dedicated to exporting?
What will be the cost in time and money for each element?
How will results be evaluated and used to modify the plan?

The first time an export plan is developed, it should be kept simple. It need be only a few pages long, since important market data and planning elements may not yet be available. The initial planning effort itself gradually generates more information and insight. As the planners learn more about exporting and your company's competitive position, the export plan will become more detailed and complete. An outline of an export plan is presented in Table 2. (See also Chapter 2 for information about market research).

From the start, the plan should be viewed and written as a management tool, not as a static document. Objectives in the plan should be compared with actual results to measure the success of different strategies. The company should not hesitate to modify the plan and make it more specific as new information and experience are gained.

A detailed plan is recommended for companies that intend to export directly. Companies choosing indirect export methods may require much simpler plans. For more information on different approaches to exporting and their advantages and disadvantages, see Chapter 4.

NOTE: Many companies begin export activities hap-hazardly, without carefully screening markets or options for market entry. While these companies may or may not have a measure of success, they may overlook better export opportunities. If early export efforts are unsuccessful because of poor planning, your company may be misled into abandoning exporting altogether. Formulating an export strategy based on good information and proper assessment increases the chances that the best options will be chosen, that resources will be used effectively, and that efforts will consequently be carried through to success.

Table 1 - Management Issues Involved in the Export Decision

Table 2 - Sample Outline for an Export Plan