Advantages and Disadvantages of Exporting

Exporting being one of the first ways many companies venture into foreign lands there are certain reasons as to why a small company would decide to export goods to another country. They include; these countries increase their sales potential despite them being small and not yet economically developed. Exporting also leads to expansion of the small country’s ‘pie’ that it earns money from, failure to which the country would be stuck in futile efforts of making money only out of the local underdeveloped market. Through exporting goods to another country, this small company will also incur increased profits due to the average orders from customers in the other country that many at times are larger than they are from local domestic buyers. Through making export sales, the country will reduce the risk that its companies may be exposed to as a result of fluctuating local and international cycles in business. Through exports, the nation’s production capacity that is idle will be put to work. In general, this is achieved through utilization of existing country’s machines, staff and factory in a more efficient manner (Mohan, 2005).

Despite the many advantages that a small company can accrue from exporting its commodities, there are also some possible pitfalls which could be overcome through implementation of necessary measures. They include; the firm being not well versed with the opportunities in the other country’s market and the country’s potential. This might lead to exploitation by the other country. To overcome this, the country needs to do thorough research on all economic aspects of the other country before engaging in any transaction, through economic analysts. Other pitfalls include; the exporting mechanics and complexities might be very intimidating especially in cases where the country has different business practices, legal systems, culture and currency from the home market. To deal with this, thorough research need to be done prior and ways devised on how to deal with these future challenges. Finally, the country’s exporters might experience many challenges while doing their business in the different country which can still be dealt with by use of proper economical mechanisms to deal with any barriers (Mohan, 2005).

Reference

Mohan,J.R., (2005) International Marketing, Oxford University Press, New Delhi and New York. Print.

 

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