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Exporting direct to international customers - Coggle Diagram
Exporting direct to international customers
Exporting direct to international customers
Advantages
Uses existing systems - e.g. e-commerce
Online promotion makes this cost-effective
Can choose which orders to accept
Endure profit margin remains with the business
Can choose basis of payment - e.g. terms, currency, delivery options, etc.
Disadvantages
Potentially bureaucratic
No direct physical contact with customer
Risk of non-payment
Customer service processes may need to be extended (e.g. after-sales care in foreign languages)
Opening an operation overseas
Advantages
Local contact with customers & suppliers
Quickly gain insights into market needs
direct control over quality and customer service
Avoids tariff barriers
Disadvantages
Significant cost & investment of management time
Need to understand and comply with local legal and tax issues
higher risk
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 - commission or distributor margin is a variable cost, not fixed
Disadvantages
Loss of profit margin
Unlikely to be an exclusive arrangement - question mark over agent and distributor commitment & effort
Harder to manage quality of customer service
Agent / distributor keeps the customer relationship
Joint venture or buying a business overseas
Advantages
Popular way of entering emerging markets
Reduced risk - shared with joint venture partner
buying into existing expertise and market presence
Disadvantages
Joint ventures often go wrong - difficult to exit too
Risk of buying the wrong business or paying too much for the business
Competitor response may be strong