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advantages and disadvantages of exporting direct to international…
advantages and disadvantages of exporting direct to international customers
exporting direct to international customers
advantages
uses existing systems
online promotion makes this cost effective
can choose whihc orders to accept
direct customer relationship established
entire profit margin remains with the business
can choose basis of payment – e.g. terms, currency, delivery options etc
disadvantages
no direct physical contact with customer
risk of non-payment
potentially bureaucratic
customer service processes may need to be extended
selling via overseas agents or distributors
advantages
agent of distributor should have specialist market knowledge and existing customers
fewer transactions to handle
can be cost effective
disadvantages
loss of profit margin
unlikley to be an exclusive arrangement
harder to manage quality of customer service
agent/distributor keeps the customer relationship
opening an operation overseas
advantages
local contact with customers and suppliers
quickly gain deatiled insights into market needs
direct control over quality and customer service
avoids tariff barriers
disadvantages
significant cost and investment of management time
need to understand and comply with local legal and tax issues
higher risk
joint venture or buying a business overseas
advantages
popular way of entering emerging markets
reduced risk
buying into existing expertise and market presence
disadvantages
joint ventures often go wrong
risk of buying the wrong business or paying too much for the business
competitor response may be strong