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ExportingThe Open University Business School

The key to export success

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When looking at international trade it might not be the obvious that will give you the best chance of success

The key to EXPORT success

International growth for enterprises is, I think, key to the continued success and longevity of most enterprises today.

 

There are a couple of key steps that one has to take. The first is to think about which market we should enter and how do we position ourselves in that market.  That requires research.

 

The thing that I have seen in the work I have done with SMEs around the world is that very often they tend to follow the leader. They go after the obvious target.  For example, we must enter China because all of our competitors are going into China.

 

In actual fact, when you do the research you might find Japan may be actually a much preferable market depending on the product or service that you’re actually selling.  So do the research, find out what is the demand, the latent and the existing demand in those markets?  What is the openness, for example, to foreign market entry, foreign products and also what is the perception perhaps even of your country of origin in that market that you’re targeting?

 

The second point is they need to think about their entry mode.  How exactly are you going to internationalise? For SMEs there’s obviously resource constraint, there’s perhaps a risk aversion depending on the nature of the organisation and the age of the organisation. Therefore some form of partnership may be the optimal route. Some form of strategic alliance, franchising arrangement for example, licencing even, depending on what you’re selling.

 

Some work that I’ve been doing in the past and some insights I’ve received from American companies on this is that in actual fact the better way to enter as part of a joint venture often is to accept that the local partner is the dominant partner. Let their name go first, for example, in the partnership agreement.  Let your ego go because they are the gate keepers. Without them you’re unlikely to get into that market.  So accept a secondary position, but be very, very clear about your contribution to the partnership and the value that you’re extracting from that.

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One comment

  • Pule Panyane

    September 3, 2016 at 3:57 am

    Very insightful. Joint Venture partnerships in export are an important factor in export success. But the relationship has to be managed diligently to be clear of responsibilities and what value each partner contributes.

    Reply

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