Export Readiness
An export readiness is when a firm has a minimum strength, know-how, monetary resources and capability to effectively meet demand for its production in a foreign market (Ali, 2004). Cavusgil (1990) study clearly investigated the internationalization readiness of firm that developed software (Company Readiness to Export) “CORE”, which evaluated a firm’s export readiness.
The author distinguished readiness to export in to two key dimensions this includes organizational and product, organizational readiness entails top management commitment, the availability of human and financial resources and the soundness of the organizational structure while product readiness relates to product adaption, design and position (Ali, 2004).
Cavusgil and Zou (1994) also deemed the matter of readiness, perceiving at the role of information internationalization in the globalization procedure of small and medium enterprises and defining internationalization readiness as being a function of its state of know-how on foreign markets and the ways for entering them.
This definition implies that the ease of use of information and awareness about foreign market is vital for a company’s preparedness for internationalization.
Pre-export behaviour of the firm
This concept can be defined as the activities of the firm in the period until the firm realises its first export sale (Caughey and Chetty, 1994).
The pre-export period is very important because it is during this stage that failure from exporting is most likely to occur and still in this stage there is development of a model that incorporates export stimuli, firm characteristics, decision maker characteristics and product characteristics which influence the company’s pre-export behaviour (Caughey and Chetty, 1994).
Market entry channels
This notion can be divided in to two: indirect exporting and direct exporting.
Indirect exporting (Caughey and Chetty, 1994): this is when the exporting producer uses independent companies situated in the producer’s country and this may engage international marketing organization or cooperative organizations (Caughey and Chetty, 1994).
Direct exporting occurs when the company as an exporter is more involved and has some control over the exporting process. There are three fundamentally kinds of direct market entry: firstly, that engages selling directly to an overseas customers who may be the end users such as import agents and distributors based in the foreign market (Caughey and Chetty, 1994).
Secondly, that engages permitting, licensing and contracting, for instance, involving the sale of knowledge, skills and capabilities to overseas buyers. Lastly, that involves manufacturing abroad, for example, joint venture arrangement (Brown, 1993).
Challenges
Making decisions whether the company is ready to export or not can be quite hard, because exporting is one of the most challenging business activities the company will always take on.
Since the road to export success is burdened with perils and blockades around each turn, the company must deal with fundamentally diverse surroundings, communicate with varied cultures in new languages, conquer a huge number of new laws and political systems, countenance the prospects of competing with the incredibly best producers and exporters within the world, and absorb a diversity of costs that are measured in various denominations (Cavusgil, 1990).
These challenges can be categorized as internal and controllable, foreign non controllable and local non controllable (Cavusgil, 1990).
Internal and controllable: Marketers can be able to acquire goods and services at a friendly price which will also be appealing to the customers and consequently facilitate marketing through various channels; such challenges can be categorized as internal, controller, SNF non-credible (Cavusgil, 1990).
The marketers have to adapt these controllable essentials to the changing market environment faced in foreign markets and therefore, the marketers have to adjust these 4p’s around the customer’s expectations and needs (Cavusgil, 1990).
In fact, there are a number of product strategies employed such as straight extension and it always does involve marketing of those products that have not undergone adaptation; it limits a product in meeting the cultural differences (Cavusgil, 1990).
When trying to make advertisements oversees, marketers may rely on those successful techniques they have always used in their own country and such strategies may be successful depending on numerous factors (Ali, 2004). Consequently, marketers may decide to provide lower-priced products in foreign countries, this may depend on the average revenue of the country involved (Ali, 2004).
When choosing what channels of distribution to be employed marketers have to decide whether retailers, direct selling or wholesalers would work best in the certain country (Brown, 1993).
Better still, companies have to make a decision on the extent to which their pricing, promotion, distribution and product to be adapted to each foreign market and this is the major problem export companies encounters, since making these decisions is not an easy task (Brown, 1993).
Foreign non-controllable: The international marketers ought to analyze all these basic policies to assess the threat level whilst exploiting all existing opportunities; it is important for marketers to evaluate the company’s strength and weaknesses.
By accomplishing this, marketers can establish if the company can survive in a foreign markets for example if a company markets to one hundred and fifty countries it should then control one hundred and fifty uncontrollable aspects that is one hundred and fifty social and one hundred and fifty legal (Cavusgil, 1990).
Government’s influence in foreign markets is significant consideration such as: various taxes rules and regulations that may hold back a company’s survival if the company should not adhere to these rules and regulations properly (Cavusgil, 1990). A good example would be, when a particular firm exports their own produced goods to other countries which have not been packed well resulting to tough penalties (Brown, 1993).
The cultural aspects in a country can also have an effect on a company’s marketing plan in foreign countries for instance when a company is attempting to carry a research on their products market, the company may be unable to find an accurate information on nationwide production objectives (Cavusgil, 1990).
The GNP and per capital income information is not available and sometimes it is usually overstated (Cavusgil, 1990). The certifications and level of standards that are required is also another challenge, since they differ across the globe. It is argued that exporters were unable to get hold of sufficient information concerning foreign certifications and the standard required (Brown, 1993).
Local non controllable: the basic of domestic environmental may at times have direct impacts on the success of the international business relation due to political influence and legal factors among others reasons.
Political decisions that involves domestic foreign policies can have severe effects on company’s international marketing relation, for example, US can limit the level of trade with other countries especially if it experiencing problems of employment, it may limit trade in to stabilize its economy (Brown, 1993).
Solutions
In order to run a successful exporting company several things are to be taken care of, they include the following;
Exporters have to plan on how to go international: according to Segal-Horn and Faulkner (1999), in exports it was frequently the clientele who internationalize first, then the company followed to meet the needs and expectations of important clientele.
The company were conscious of offshore demands for their services and goods and customized their global activities in response, while companies’ decisions to internationalize were based on the ease of use of government assistance; companies have to be involved in global activities as their vital part of their international strategic planning (Brown, 1993).
Mode of entry: before any company decides to internationalize its products and services it should choose the mode of entry, according to Albaum et al (1994), employing subsidiaries, local partners and agents led in the wide spread of risks and reduced overseas operational costs. It seemed that some companies chose to deal with subsidiaries or local partners of the similar company.
Merely, in cases where partnerships can not be achieved, firms go into the market by the use of unrelated business agents and when this happens ceremonial contracts were frequently put in place to protect the companies that are involved (Mahoney et al, 2001).
Creating a market awareness of the products and services (Mahoney et al, 2001). Generally, once companies were founded in the overseas markets they stressed three main activities which include, products/services level, profitability and continuity (Mahoney et al, 2001).
The First issue is the value of networking as a marketing tool, although some companies may engage in numerous ways of promoting themselves, a logical brand awareness model was obvious which can only be built through networks through recommendations and word of mouth arrangements by the management of firms.
The Second issue is maintaining the brand’s reputation; this is achieved through proper pricing at the best level whilst maintaining the quality of the products (Albaum et al, 1994). According to Hill and Jones (1995), it is very important for a company to constantly deliver high quality products.
Managing risks: managing risk emerges as a crucial challenge, further dealing with day to day fluctuations in the exchange rate companies realized that when they involve themselves in international trading they were unavoidably exposed to any impact of globe events (Elias and Williams, 1995).
In this case there is diminutive that can be done to evade such events altogether the unfavourable effects can be diminished by having a huge spread of markets and this is referred as a sprinkler strategy (Elias and Williams, 1995).
Companies can manage pessimistic world events and handle perils if they keep themselves well knowledgeable about such issues, for instance, company may tremendously be cautious with the issues of payment of their product/service especially when dealing with a new consumer (Brown, 1993).
The company can make sure full payment is made before products are provided, but still companies should learn and understand cultures of foreign countries as a way of conquering export challenges, alternatively some authors like Czinkota et al (1996) argues that insurance is needed to cater for losses caused by political and economic risks.
The importance of staffs; the recommendation is that, to ensure success of a company, always employ experts (Fisher and Fisher, 1998).
The author states that attracting and maintaining good export experts is a key challenge to all firms. Staff members were constantly referred to as being critical in maintaining the feasibility of the company therefore, companies should have qualified employees who can be able to handle international issues.
Handling customers with care, awareness and use of government assistance: companies face several challenges and most of them do not usually try to find help from the government probably because they perceive the problems as minor. Where any assistance is necessary it is typically in the form of connecting with abroad governments (Brown, 1993).
According to Fisher and Fisher (1998) some companies were familiar with several federal government plans but others were not aware of the assistance provided by Victorian states government and realized that they would be unlocking to employing such assistance if they feel it suitable for them.
Some of the assistance the government could offer to the export companies and their customers include: risks lessening where the government agencies could make sure sufficient funding plus insurance is accessible either directly or indirectly through private sectors.
The government agencies can exploit their own awareness and consultant networks to build up education services suitable to product exporters. Issues that can be able to facilitate success of the oversees market are; emphasising the copyright act, and ensuring proper pay for the work undertaken. Also offer export policies that include policies that promote and prize new and existing exporters (Fisher and Fisher, 1998).
Conclusion
Before any company decides to be an export company, it should study and understand several concepts concerning both domestic and international marketing this is because there are various differences between domestic and international marketing as a result of challenges that may face the company in foreign market such as language barriers, culture and technology therefore company should know how to tackle these challenges.
References
Albaum, G., Strandskov, J., Duerr, E., and Dowed, L. 1994. International marketing and export management. Addison-Wesley Publishing Company Sydney.
Ali, M. J. 2004. Impact of firm and management related factors on firm export performance, Journal of Asia Pacific Marketing. 3(2):5-20.
Brown, R. 1993. Toward a National Export Strategy, Trade Promotion Coordination Committee, Washington.
Caughey, M. and Chetty, S. 1994. Pre-export behaviour of small manufacturing firms in New Zealand, International Small Business Journal, 12(3):62-68.
Cavusgil, S. T. 1990. Assessment of company readiness to export. International Marketing Strategy, Oxford: Pergamon Press.
Cavusgil, S. T. and Zou, S. M. 1994. Marketing strategy-performance relationship: An investigation of the empirical link in export ventures, Journal of Marketing, 58(1):1- 21.
Czinkota, M. and Ronkainen, I. 1995. International Marketing. The dryden press. Sydney.
Elias, J. and Williams, D. 1995. International Business strategy, Pitman publishing. London.
Fisher, S. and Fisher, D. 1998. Export best practice: commercial and legal aspects. The Federation Press. NSW.
Hill, C. and Jones, G. 1995. Strategic Management, An Integrated Approach. Houghton Mifflin, Boston.
Mohoney, D., Trigg, M. Griffin, R., and Pustay. 2001. International Business. A managerial Perspective. Prentice Hall. New South Wales.
Segal-Horn, S. and Faulkner, D. 1999. The dynamic of international strategy, ITP, London.