Question

A company is planning to venture overseas through EXPORT operation. Please tell the owner of this company, the pros and cons of entering global market as

(i) direct exporter, (ii) indirect exporter, and (iii) entering through export management companies. - list in bullet points format -

Answer 1

When any company decided to enter in global market, they have to consider to select the best entry method. Direct exporting, Indirect exporting and through Export management companies methods. They three have some pros and cons. Direct exporting is selling of goods directly to customer in international market where as Indirect exporting is selling of goods to an intermediary who later sells it to customer in international market and Export management company are private companies which facilitates the distribution of other companies goods to international market.

If any owner is planning to enter in global market as Direct Exporter :-

​​​​Pros-

• Direct Customer contact
• Direct exporting allow you to identify the potential buyer.
• Direct and fast feedback from customer.
• Higher profit margins
• Independence from foreign partner.

​​​​​​CONS-

• There is lot of effort required to build a strong customer base.
• More time reqired as well as more money .
• Greater financial Risk.
• Insufficient knowledge of market and culture.

If any owner planning to enter in global market as Indirect Exporter :-

Pros-

• It required minimum involvement in exporting.
• Limited staff required as intermediary has access to market.
• Complete market coverage
• No concern regarding logistics because intermediary can handle it.
• There is no specific requirement of Skill and knowledge.
• Lot more support and guidance from local intermediary.

Cons-

• Lower level of profit.
• No direct contact with customers.
• Lack of control over prices.
• High dependence on intermediary.
• Low profit margin.
• You can lose your control over foreign sales.

If any owner or company planning to enter in global market through Export management company:-

​​​​​Pros-

• Uses of existing foreign distributors.
• Faster entry in market.
• Market research facility
• Managing Foreign sales
• Better use of market networking.
• Easy access to informations about Export.

Cons-

• There is competition from export management company's other products.
• No quality control.
• Extra cost

These above are the pros and cons of three methods of entering Global market. They all have pros and cons regarding international market.