Question

It has been suggested that if the entrepreneur sees exporting as more than just a means of increasing economic strength of the enterprise, but also as a vehicle for ......................it may positively impact the decision of the entrepreneur to engage in exporting.

.....short explanation.....

Answer 1

It has been suggested that if the entrepreneur sees exporting as more than just a means of increasing economic strength of the enterprise, but also as a vehicle for diversification. It may positively impact the decision of the entrepreneur to engage in exporting.

Exporting refers to sending goods and services to other countries for sale.

Benefits of Exporting

Gaining Global Market share

Businesses that export can enjoy greater revenue and less risk because they are selling their products to a variety of consumers outside the local economy. If the local economy suffers, countries that engage in international trade can still enjoy a profit from their international customers.

Currency Benefits

Also, trading with countries that have a stronger currency than your local currency can further elevate the benefits of international trade.Exporting goods generally increases revenue and boosts the local economy

Diversification

Selling to multiple markets allows companies to diversify their business and spread their risk. Companies will not be tied to the changes of the business cycle of domestic market or of one specific country.

Compensate for Seasonal Demands

Companies whose product or services are only used at certain seasons domestically may be able to sell their products or services in foreign markets during different seasons.

Low per unit Cost

When company goes global their customer base increase. As a result the demand will increase resulting in increase in production capacities and reducing per unit cost.Companies can also sell their excess production in foreign markets without offering discounts.

However increase costs, financial risk , complicated documentation and government regulations are some drawbacks of Exporting.