Export Strategies Strategic-Reasons-to-Export
Exporting can be one of the best ways to grow your business:
• Grow your bottom line (companies that export are 17 percent more profitable than those that don’t).
• Smooth your business cycles, including seasonal differences.
• Add management and intercultural expertise.
• Use production capabilities fully.
• Defend your domestic market.
• Increase your competitiveness in all markets.
• Increase the value of your intellectual property should you choose to license it.
• Increase the value of your business should you choose to sell it (and start another).
Exporting Is Strategic in Another Way
With the volume of trade growing exponentially and barriers to trade falling, competition in a company’s domestic market is intensifying, particularly from foreign competitors. We need to compete in our own backyard while we simultaneously open markets for our products and services in other markets:
• Ninety-five percent of the world’s consumers live outside the United States. That’s a lot of potential customers to ignore.
• Foreign competition is increasing domestically. To be truly competitive, companies must consider opening markets abroad.
• Exporting is profitable.
• Exporting helps businesses learn how to compete more successfully.
According to a World Bank report, Global Economic Prospects, trade in goods and services is likely to more than triple by 2030. Over the same period, the global economy will probably expand from $35 trillion in 2005 to $72 trillion. The number of people considered “middle-class” will triple to 1.2 billion, enabling them to afford international travel, better education, and imported goods from the United States. Exports from the United States, according to the same report, are expected to grow by nearly 10 percent per year for the next several years. Your product or service could be among them.
With this significant projected growth in global trade, fueled in large part by newly affluent consumers in China, India, and other developing economies, the challenge for businesses of all sizes in the United States is how to dip into this incredible revenue torrent. A Basic Guide to Exporting aims to help prime your pump.
As global trade grows, companies that engage in it report a shift in income derived from their export sales compared with sales in their domestic markets. A study of U.S. exporters found that 60 percent of small companies in the survey derived 20 percent of annual earnings from exports, while 44 percent of medium-sized companies did. When asked whether export sales would grow at least 5 percent per year for the next 3 years, 77 percent of the small companies and 83 percent of the medium-sized companies said they would.
You might reasonably respond by saying, “That’s all well and good, but do I have what a person in another country will buy?” As you delve further into this book, you’ll read about companies of all sorts that produce an amazing array of products and services and have grown their businesses through exports. They include:
• Conversational English modules that can be downloaded from cell phones
• Bicycle racing socks
• An exercise machine
• Bolts • A fish food • Garage doors
• Skylights • Lightning deflectors
• Previously owned mining machinery
• And a host of other interesting and useful products and services
Some of what’s sold is unique, but most is not, relying on other factors such as superior customer service or marketing to close the deal. The businesses and businesspeople behind them are excellent at business fundamentals and passionate about expanding globally. One business featured in this book calls itself a “micro-multinational”; it has 40 employees but sells to 60 different countries.
Even Companies That Don’t Make Anything Are Flourishing Abroad
These companies make money by providing wholesale and distribution services. And there are thousands of them—many of them small.
Another answer to “Why bother to export?” is that exporting adds to the knowledge and skills of everyone in a company who does it. Doing business in a market that’s beyond one’s borders can have a transformational effect on its practitioners. The experience of forming new relationships, getting up close and personal with another culture, figuring out how to meet the needs of others, and learning how to be inventive in addressing new business challenges not only is personally rewarding; it also leads to improvements in products and makes companies stronger in whatever market they compete.
As one small exporter interviewed for this book put it, “Exporting is easier than we imagined. Exporting opens your horizons to what’s going on in the world economy. We need to take that step outside ourselves and develop relationships and open doors. It may start out small. It did for us. But it’s growing. We are a better company and better managers. Maybe even better persons. And to me that’s what success is all about.”