Introduction
Companies are aware of the existence of making business abroad and this is another option for them to nurture their capabilities in making business. They believe that if the business achieved the success in domestic market, they can have an advantage to make another round of success in international market. Although most of the companies or organizations are aware in the difficulties of starting the business, still they should be on-guard in terms of their entry and transactions in the international domain.
Background of the Study and Problem Statement
Most of the companies are willing to sacrifice their profit for the purpose for growth during the start-up period of international expansion (Palmetto Consulting, Inc., 2004). An ideal company treats the international market differently from the domestic market. And historically speaking, companies that are willing to plunge into risk are the one that survives in the tight competition in globalization and expansion. The study is focused on the export business and it identified the basic question for those marketers that aims to arrange business abroad – what should the organization must know in starting the export business?
Research Objectives
The purpose of the study is divided into three facets. First and main purpose is to open the idea about the export business. The first objective attempts to clarify the concept of exporting, more than the means of making business abroad. Second purpose is to identify the challenges as well as the opportunities available in exporting business. And the third purpose of the study is to serve itself as a guideline or basis for those organizations that are open for the idea of exporting and clouded with doubts.
Research Questions
Making business abroad is almost the same as meeting different people. A person needs to study the similarities and differences of the foreign land to his mother country then exert an effort to have adjustments. In the language of business, the organizations should first examine the foreign country before making a thrust on introducing their exporting product. The research acknowledges the difficulty of exporting business and therefore, the following questions are the fibers of the central issue in exporting.
a) What is exporting and in what ways will it help the business’s growth?
b) What are the rules, policies, or regulations that a starting business should bear in mind before engaging in exporting business?
c) What are the common constraints in foreign countries and what adjustments that an exporting business should provide to satisfy the success?
Literature Review
Exporting business has similarities and differences in domestic marketing. The main difference that the firm should identify is the level of demand of the product that they are trying to market. In addition, there are export prerequisites that the firm should have to settle first and satisfy (Kogon, 2006). The transaction costs of international market entry are the basic issues in the businesses that are engaged in either export or import nature of business. The entry might be too expensive to the small firm because there are certain scheduled costs of exporting that is common in start-up businesses (NZTE, 2007). It is identified that the common businesses involved in exporting needs to measure the importance and efficiency of the shipping. In addition, if the small firm will try to enter in a market where there is a large number of competitors and gathered few middle-skilled employees, the firm will only experience the loss (Palmetto Consulting, Inc., 2004). Clearly, in the generation of globalization, only the large, trusted, and well-experienced firms are in the center of the arena and the opportunities are very slim to the small firms, especially when they are starting up.
In order to facilitate the expansion of the small firm and support its growth, it is identified that businesses often turn to Accounts Receivable Financing or factoring. This method of financing is generally applied in the business which is engaged in start-up or growth phase when the firm is unable to receive additional credit in either bank or credit unions. The accounts receivable financing allows businesses to turn over their accounts receivables to a financing company in exchange for their needed fund that is most common in cash (CBSC, 2004). At least, there is difference in between the increase in growth or sales and stagnation or bankruptcy. The exporting business can also view the competitiveness or support on growth in determining the strong level of currency or financial system in the foreign country (Johnson and Szarek, 1984).
Methodology
The applied method in the research is the utilization and examination of the past literatures or case studies. The case-study method is highly valued as a qualitative research study that drives to theoretically explain the activities in international market. Furthermore, the case-study method is applicable in discovering the other process in foreign market and if necessary, allows identifying the points in literature gaps.
Conclusion
Business leaders should close their eyes in the reality because small firms have limited options. But in another sense, the small firms can make a successful entry if and only they are capable enough to establish a relationship with the foreign customer. The firm should devote their time in taming the market by identifying the suitable marketplace, target market, and the demands. It is easy to say but hard to accomplish and yet can be developed through the application of research and strong foundation of making business.
References:
CBSC, 2004. Exporting: Business Sourcing Guide, Canada Business Service Centres [Online] Available at: http://www.smallbusinessbc.ca/pdf/export.pdf. [Accessed 26 Jan 2010].
Johnson, M., & Szarek, P., Effects of Strong Dollar, Economic Recovery Apparent in First-Half Import and export Prices. Monthly Labor Review, Vol. 107
Kogon, M., 2006. Exporting Basics. [Online] Available at: http://www.citd.org/files/global/startup/ExportingBasicsUpdate080807.pdf. [Accessed 26 Jan 2010].
NZTE, 2007. Preparing an Export Plan: a How to Guide. New Zealand Trade and Enterprise [Online] Available at: http://www.nzte.govt.nz/get-ready-to-export/Starting-to-Export/Documents/Preparing-an-export-plan.pdf. [Accessed 26 Jan 2010].
Palmetto Consulting, Inc., 2004. Costs of Developing a Foreign Market for a Small Business: The Market & Non-Market Barriers to Exporting by Small Firms. SBA Advocacy [Online] Available at: http://www.sba.gov/advo/research/rs241tot.pdf. [Accessed 26 Jan 2010].
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