CONNECTING INDIA GLOBALLY
Deciding when to go global is a tough call for most of the Indian businesses. However, when you do intend to expand your reach overseas, you do not want to do it without a complete evaluation of where your business stands. Exporting provides a number of business benefits, which include gaining a competitive advantage, increasing internal skills, knowledge and expertise, and spreading the business risk. The decision to start exporting is prompted by various factors but it is important to assess the key factors that determine whether a business is ready to export and expand globally. These following key factors help determine a business’s export readiness:
Benefits and Trade Offs of Exports
Brainstorm about the benefits that expanding the market internationally can bring to your business and follow them up with the trade offs.Once the benefits seem to be more fruitful, the business is first step ready towards exports.
The foremost factor to consider for export readiness is the objective and goal of the business.The export objectives needs to be clear and there should be a realistic idea of what exporting entails.
It is important to consider the performance of the domestic business before deciding to expand internationally.Robust domestic sales are an important key factor to determine export readiness.Performing an in-depth analysis of the existing business helps determine the feasibility of growth in the international markets as well.
It is important for a business to identify its target market.The decision on which market to enter depends on the knowledge of the market, the presence and absence of competitors in the market, the ease of entry into the market, and Government initiatives.
Identify products that have export potential.The business is export ready when it knows about its product and whether the product is legal and exportable in a chosen market.Because each county has its own standards and regulations,it is important for the business to possess the space and equipment needed to manufacture the product according to the needs of specific location. Also products that are unique in nature have a better reception in future markets. Such products include patents, superior quality, cutting edge technology and adaptability.
Before exporting, the business needs to ensure that it will be able to achieve the strict international quality accreditation.Some countries have strict governmental regulations that require special testing, safety, quality and technical conformity measures.
Any business that is going to expand overseas will need strong financial resources. This is to ensure that the business will be able to cover any extra costs that arise due to international expansion without destabilizing the domestic market. Ideally, export development should be viewed as investment as it is not a short-term process. It is important to be familiar with credit terms of the chosen market and to ensure the presence of a good working capital to cope with them.
The business needs to be ready with a legal team that can guide it through the legalities of export laws in a foreign country.Legal and tax implications of exporting and intellectual property rights are among the few issues that the business needs to be ready for.
Appropriate infrastructure is also very important to determine a business’s readiness for exporting. The business will have to cope up with demand from domestic market as well as international market and therefore it will need spare capacity for increased production, available finances to fund export development, administrative personnel to deal with increased workload and distributors or agents in chosen market. These infrastructure components need to be in place before a business thinks of exporting.
International Trade Experience
For any business to be ready to export,it needs to assess its international trade knowledge which is a must know how for exporting. There are a wide range of issues that the business needs to familiarize itself with.These include documentation required for exports, foreign currency, export permits, etc.
It is upon the business to assess what motivates it to expand in an international market.Some motivational factors could be: long-term expansion plans, exploitation of unique technology and expertise, etc.
The Business Export Assessment Readiness Plan can,thus,be essentially summarized as below:
Once the business seems export ready, the next step is to design the export plan to complete the businesses process of readiness towards export.The purpose of the export plan is to assemble important facts such as goals and constraints and then to create an action statement that takes these facts into account.Many companies begin export activities without having a proper action chart and because their early efforts are poorly managed, they are unsuccessful.It is important to formulate an export strategy that is based on proper assessment and complete information as this increases the chances of success and ensures that resources will be used effectively.Ultimately, the business can address these final questions for its management to decide
- Which countries are being targeted for export purposes?
- What special challenges pertain to each market and what strategy will be used to address them?
- Have you created a marketing plan for expansion into your target market?
- What specific operational and administrative steps will be taken and when?
- Which products are selected for export development and what modifications are being made to adapt them according to overseas market?
- What will be the time frame for implementing the export strategy?
- What will be the cost in time and money for each element?
- How will the end result be evaluated?
The above few key factors and the questions for the export plan form the basis of a business’s readiness when it comes to exporting. These factors make it easy for any business to determine if it is ready to foray into the international markets. In short, the distinctive quality of an export ready business is that it has the requisite commitment from management and it is prepared to fund exporting activities. It understands the added demands of an international business and the pressure that it can place on existing key resources. It has realistic expectations regarding rate of return on investment and is prepared to modify products and services according to local market conditions. Therefore, an initial stage of evaluating the export readiness of a business includes a careful review of the infrastructure, sales and marketing strategies, operations, administrative, research, legal and financial readiness.