Advantages and Disadvantages of Exporting Process

This article discusses the advantages and disadvantages of the exporting process in international markets. It explores the differences between direct and indirect exporting methods and provides insights into the various steps involved in the export process. The article also highlights the differences between merchandise and service imports and exports, and suggests different methods that SMEs can use to tap into international markets.

To have a secure deal in exporting process use of direct methods of exporting is suggested for
Barclays as it lead to more control over sale transaction. Beside this, effective market research and
analysis should also made by Barclays to identify better export opportunities at global market.
M4) Export process
The export process is a lengthy activity that includes several steps. It get started with
having a export order which is a kind of written agreement between exporter and importer. After
that, examination and confirmation of order is made with respect to terms and conditions of
contract. The next step includes the clearance process from central excise and various forms and
legal formalities are needs to be met by exporter. Various documentation are also required at this
stage of export that are as follows:
Letter of credit- it is a written document issued by bank that guarantees buyer's
(importer) payment to seller (exporter) on time and with correct amount.
Packing list- it is a detailed document that states and includes information about all the
product and packaging details contained in each shipment.
Commercial invoice- it is a legal document between the exporter and importer that
clearly shows and describes the information about sold goods and amount and value of export on
which custom duty is levied.
Terms of payment- it is the document that includes all the terms and conditions of
payment of amount that includes period allowed fir payment, amount due, method of payment like
cash on delivery or deferred payment, etc.
Customs document- it includes all the relevant shipping documents like airway bill, bill
of lading, commercial invoice, insurance certificate and other documents required to clear customs.
P5) Advantages and disadvantages of exporting process
Export is process that basically includes sell of goods and services to customers in some
other countries with the aim of having better market share and profits. There two main type of
export process which are explained below with respect to Barclays Plc:
Direct exporting- it that process of exporting where sale of goods are made abroad
without involvement of any middlemen. Under direct exporting, organisation itself takes
responsibility of selling goods overseas and wholly responsible for dealing with foreign firms
directly. Following are the advantages and disadvantage of direct exporting that can be
encountered by Barclays Plc
Advantages Disadvantages
 Profits are more as intermediaries are
eliminated from exporting process.
 Provide greater degree of control
over sale transaction and makes it
more efficient and effective as direct
connection with customers are made.
 Require more time and money to
attract customers of foreign country
without any middlemen.
 Exporting organisation is wholly
accountable for all risks and safety of
logistics in transaction.
Indirect exporting method- it is the method where sale of goods are made with the help
of some of middle men in abroad or foreign location. Use of some independent agents, export
management companies, etc. are made as sale intermediaries who are having the responsibility of
sending and exporting goods at foreign countries. The advantages and disadvantage of indirect
exporting are as follows:
Advantages Disadvantages
 Provides a less risky way off
exporting with the help of an expert
middlemen and sale intermediaries.
 Beside this, less amount of
investment and time is required as
compared to direct investment.
 Reduce the amount the profit as
commission of agent and middlemen
is also included.
 Dilution in control over sale
transaction is also lead by indirect
exporting.
Tapping into new and international Markets

P7) Various method in which SMEs can tap into international market
The various method that can be adopt by SMEs to tap into international market are as
follows:
Exporting- it is process of producing and manufacturing goods and services in the
domestic country and shipping and transferring it to some other nation across the border line. It
provide a fast an easy way to SMEs to get enter into an international market.
Franchising and Licensing- it is a process under which an organisation allow some other
form or individual in a form country to duplicate and sell its product and services at global level.
Under licensing and franchising method a fees charged from the other person as it is making and
duplicating its idea and product. Use of this method can be made by SMEs to sell and earn better
profit at international level.
Joint venture- it is a business process and arrangement where two or more parties are
making a agreement or pool for the purpose of accomplish and achieving a specific target. An
organisation can form an agreement or join venture with some other firm or international
organisation operating at global level to get tap and get assess to the international market.
P6) Differences between merchandise and service imports and exports
Following are the difference between merchandise and services imports and exports:
Basis Merchandise Service imports and exports
Definition It is a process or practises that
is associated with sale and
transfer of goods and tangible
products across the boarder to
a retail consumer.
Import and export of services
are mainly a process
associated with sale and
transfer of intangible products
and services across the
boarder of a nation.
Class of things sold Under merchandising only
tangible products and services
are sold and transferred
among countries.
Under the methods of import
and export the intangible
class of things that is
associated with transfer and
facilitating services at
different locations of world
are included.

M5) Evaluation of different method that can be used by SMEs to tap into various market
On the basis of above discussion it can be evaluated that exporting method provides the
simplest way for a SME to enter the international market and also yield competitive advantage
through facilitating better ideas but it lead to increase in administration and operating cost of SME.
Beside this, use of franchising and licensing method provide sharing in risk and also require low
capital investment to operate at international level but a threat on intellectual property right and
duplication of product is higher. Further, use of Joint venture provide a better connection and pool
with a foreign organisation to have access to international market but it lead to dilution in business
control of SMEs thus, create rigidity and enhance the chances of conflicts in decision making.
Therefore, on the basis of this above evaluation it can be recommended that the best way
for a SME to enter international market is exporting as it dose not lead to dilution in control and
does not create any risk to intellectual property right and at the same time facilitates an easiest and
simplest way to enter and operate at various global location.
Conclusion
On the basis of above content it can be concluded that there are two main types of
exporting process i.e. direct and indirect export. Beside this it can be concluded that merchandising
is mainly associated with tangible products while services are get imported and exported across
borders of nation. There are various methods that can be adopt by SMEs to get a tap into
international market that includes exporting, joint venture,etc.
P8) Compare and contrast in various ways through which SMEs can tap in international
market
To effectively compare and contrast all the possible ways through which SMEs can tap
international market a description about their advantages and disadvantages are provided in table
below:
Method to
tap in
internationa
l market
Advantages Disadvantages
Exporting Lead to enhancement in productivity
and better profit margin through proving
a simplest and easiest way to enter a
global market.
Helps in having better exposures to new
ideas and management practices which
facilitates increase in competitiveness.
May lead to increases in operating
and administration cost of SMEs as
need to deal with export regulations.
Need of product modification is
also faced by SMEs that can hamper
their control and sales in domestic
market.
Franchising
and
Licensing
Risk and responsibility of success of
products and services offered by SMEs
is shared by both the parties at
international level.
Lower capital requirement and high
return on investment is provided by
licensing and franchising method at
global level.
Risk of duplication and violation of
copyright is over intellectual
property of SMEs is maximum
under this method.
Joint
venture
It facilitate a new insight and expertise
to a SMEs to effectively operate and
function at global level.
Joint venture lead to an agreement
between two or more parties thus,
provide assess to better resources of
foreign organisation like specialised
staff and technology.
Joint venture can be fragile that
lead to increase in clashes and
conflicts related with corporate
culture or other operational
decisions.
Flexibility of SMEs can be
restricted as it is difficult to keep a
balance and coordination with other
parties.