Introducing Company A, an aspiring exporter with a strong local market presence. The company is enthusiastically planning to expand into multiple new foreign trade markets simultaneously. Management has budgeted for the research process and the company has determined that it has the means to increase production. The only issue is that they do not fully understand what is involved in becoming export ready. This is very apparent in their decision to tackle several markets at the same time, as every potential new market comes with a slew of regulatory requirements necessitating company and product adjustments. Company A is in need of export assistance to better understand the foreign trade landscape.
As Company A creates its short list of new markets, management begins their preparation for promoting their products abroad and securing export sales. They soon discover that the scope of work multiplies with each new target market. For example, whereas Company A has sufficient production capacity to increase its current output, management did not consider the unique product requirements of specific markets. Despite the company’s products being of a high quality, a number of them must be adapted in order to comply with a unique set of regulations. Suddenly, the company’s production capacity appears to be a lot more limited than was initially anticipated.
Another essential consideration for export readiness is management’s commitment to the export initiative. This implies the allocation of funds to extensive staff training, new production equipment and international marketing activities. As each foreign trade market has its own unique requirements, the total financial outlay estimated for international marketing campaigns in the countries selected soon exceeds the total amount budgeted for such activities. Meeting country-specific regulatory requirements involves extensive research and substantial foreign currency budgets. To make matters worse, Company A learns that export sales often have delayed financial returns, as international business typically involves longer payment terms.
It is not long before Company A’s management discovers through trial and error all the additional steps involved in achieving ‘export readiness’ and realises that there is a great deal of work to be done before their business is ready for export sales. Had they been well informed about export procedures at the outset, valuable time and resources could have been invested in the selection and development of one or two foreign markets, with better results.
Make sure you do not make the same mistake as Company A, by launching into exports without first expanding your export knowledge. Get the export assistance you need to keep your company up to date, Trade Forward Southern Africa is offering a comprehensive, and free online suite of training modules that cover a wide range of export topics. These modules are in the process of being developed in collaboration with the International Trade Institute of Southern Africa (ITRISA).
Click the links below to sign up for our multimedia training at no cost and start expanding your export knowledge now!
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