Exporting & Forms of exporting

Exporting

• Simple mode of internationalizing a domestic business

• Advantages

– Allows a firm to quickly enter the foreign market
– Often involves less financial exposure
– Permits a firm to enter a foreign market gradually, and in this way allows it to assess local conditions
and fine-tune its products to better suit the needs of the customers in the host country

• Disadvantages

– Little control over marketing and distribution in the host country
– Can quickly lose market to other firms
– In case of many goods, transportation costs may be high rendering the exported products too
expensive for host markets

Forms of exporting:

Indirect exporting
– Occurs when a firm sells its products to a domestic customer, who in turn exports the product, in
either its original form or a modified form

Direct exporting

– Involves sales to customers - either distributors or end-users - located outside the firm’s home country

Intracorporate transfers

– Is selling of goods / services by a firm in one country to an affiliated firm in another