Exporting is the simplest and widely used mode of entering foreign markets. The advantages of exporting include:
Need for limited finance:
If the company selects a company in the host country to distribute, the company can enter international market with no or less financial resources. Alternatively, if the company chooses to distribute on its own, it needs to invest financial resources, but this amount would be quit less compared to that would be necessary under other mores.
Less risk:
Exporting involves less risk as the company understands the culture, customer and the market of the host country gradually. The company can enter the host country on a full-scale, if the product is accepted by the host country’s market. A British company selected this mode to export jams to Japan.
Motivation for exporting:
Motivations for export are proactive and reactive. Proactive motivations are opportunities available in the host country.
Forms of Exporting
Forms of exporting include: indirect exporting, direct exporting and intra-corporate transfers.
Indirect exporting:
Indirect exporting is exporting the products either in their original form or inthe modified form to a foreign country through another domestic company. Various publishers in India including Himalaya Publishing House sell their products, i.e., books various exporters in India, which in turn export these books to various foreign countries.
Director exporting:
Direct exporting is selling the products in a foreign country directly throughits distribution arrangements or through a host country’s Baskin Robbins initially exported its ice-cream to Russia in 1990 and later opened 74 outlets with Russian partners. Finally, in 1995 it established its ice-cream plant in Mascow.
Intra-corporate Transfers:
Intra-corporate transfers are selling of products by a company to itsaffiliated company in host country (another country). Selling of products by Hindustan Lever in India to Unilever in the USA. This transaction is treated as exports in India and imports in the USA.