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Summary Export Management: A European Perspective, ISBN: 9789001700324 Export Management
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Summary Export Management: A European Perspective, ISBN: 9789001700324 International Supply Chain Management (FBE_2000SCM219-BE-IB)
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Export managementDirect export: when the company itself is going to export(extensive (structural)
commitment).
Indirect export: when the company uses an intermediary to export. (Least commitment)
Cooperative export: exporting in corporation with another company.
The extent to which a company wants to tie itself to the foreign market depends on the
attractiveness of the location, the company’s capacity and the risks.
When entering a foreign market the company is usually led by three principles:
- Naïve principle: when the company uses “one strategy fits all” strategy. This doesn’t
allow heterogeneous products for foreign markets.
- Pragmatic principle: the company adjusts its entry strategy to each foreign market.
In the first phases the company chooses a distribution channel with little risk. Only if
a distribution channel does not bring in enough business, a different policy will be
contemplated.
- Strategic principle: the entry strategies are compared, and they will choose a
strategy when the sales channel fits in with the market objectives of the company.
(distribution possibilities)
Entry strategy=distribution policy: determines in what way the product is being sold abroad
and through which channel.
Distribution channel: System of marketing organizations which links the producer with the
customer abroad.
The way a company approaches a foreign market can be divided into two:
Sales approach: short term, main objective: direct sales. They do not use a systematic
approach for entering a foreign market and also no systematic selection for target markets.
They are just there for profit.
Entry strategy approach: Long term, selects target markets, thinks about distribution
possibilities for entry strategy. Main objective: build a permanent market position.
Factors which influence the choice of direct, indirect or cooperative export are:
Internal factors
1: The size of the company: among knowledge of international entrepreneurship and style
of management will determine the choice of the distribution channel. E.g. A small company
will choose third parties for sales and marketing.
2: The nature of the company: e.g. if a company has a culture of decentralizing it will be
open to third parties.
3: The experience of the company: if entrepreneurs are familiar with one way of entry, the
organization is geared to this.
, 4: The nature of the product: it decides which distribution channel will be chosen. E.g.
computers are not often not exported directly.
External factors
1: Socio-cultural aspects: When a company finds it risky to go to another foreign market
because it is very different from its home market, it will choose an entry strategy which it
will not be tied.
2: Market size and growth: The bigger the market and market potential, the more a compay
will be inclined to market the product. This will create growth.
3: The situation in the foreign market: When the competition is high in foreign markets, the
company will choose a flexible strategy. When choosing distribution channel they need to
have a competitive advantage. When third parties can take care of marketing, the company
will often choose direct export.
Tariffs or quotas play a role; when import is expensive the company will push production to
the foreign country.
4: The marketing objective: Many companies use an agent or distributor which will offer
turnover and market growth.
5.2 indirect export
The most common methods employed in indirect export are:
Distribution channels:
The agent (medium risk) : This entry strategy fits neatly into the first step of
internationalization
An agent is someone who is familiar with the market/sector, has good contacts with
customers, is aware of competition and sales and knows the specific clientele for the
export products on offer.
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