Exporting Processes: Analysis of Direct and Indirect Exporting Methods

This report provides a detailed analysis of various exporting processes, differentiating between direct and indirect exporting methods, outlining their respective advantages and disadvantages. It explores the differences between merchandise and service imports and exports, and the essential documentation required for entering new international markets, such as letters of credit, packing lists, and commercial invoices. The report further examines different methods of tapping into new international markets, including market access strategies and financial support, while also acknowledging their limitations. It also discusses how Small and Medium Enterprises (SMEs) can tap into these markets by exploring joint ventures and direct exporting, with a focus on the pros and cons of each approach. The report references various academic sources to support its findings and provides a comprehensive overview of the topic.

Advantages and disadvantages of
different exporting processes
Exporting process are the set of procedures
that are executed by firms with a view to
export their offerings in a number of
locations across the globe. In this relation,
there are mainly 2 types of exporting
procedures which can be opted by
organizations for execution of export in
nations.
Both of them are described in a brief
manner as underneath: -
Direct Exporting
This can be referred to as the procedure
of sale of offerings in a new nation in the
absence of middlemen. Hereby, the sale
activities are executed by the firm itself. In
this relation, there are several modes with
the help of which export can be done
(Ibeh, Crick, and Etemad, 2019). These are
acknowledged to be acquisition,
partnership and so on.
 Advantage: This provides
assistance in protection of
trademarks, patent, goodwill and
other IPR.
 Disadvantage: The cost to the firm
for adopting this method is very
high. Further, the risk involved is
also huge.
Indirect Exporting
This can be referred to as a
procedure whereby a firm is engaged in
sale of its offerings in foreign markets with
the usage of intermediaries. Hereby, the
mediator sells the offerings to customers or
wholesalers.
 Advantage: Financial resources
needed to do indirect exporting are
relatively lower than needed in
direct exporting. Further, it
provides effective access to
markets to the firm.
 Disadvantage: Hereby, there is no
control over marketing, distribution
and other activities associated with
sales. Further, there is extensive
risk in relation to choice of
distributor as any adversity would
place a substantial influence over
the company.
Tapping into New and International Markets

Differences between merchandise
and service imports and exports
Merchandise and service import:
This can be referred to as the procedure of
flow of goods and services from one
country to domestic market. This is used
by organisations with a view to gain
growth in rapid course of time (Wu, Ma
and Liu, 2019). The main purpose behind
executing this is to meet the lack of
availability of offerings or resources that
are not available within the confines of
home country.
Merchandise and service export:
This can be referred to as that mode of
business expansion whereby companies
offer products and services to another
market for the purpose of increment in
sales as well as profitability. The main
purpose behind doing so is generating
extensive foreign income for the
entailment of growth and development.
Documentation required while tapping
into new markets
There are certain documents which are
considered important for organisations to
possess while gaining access into a new
market or purchase merchandise from
another country. Some of these documents
are briefly described as follows: -
Letter of Credit: This can be
referred to as a document which is issued
by one bank to another with a view to act
as the guarantee for payment made to a
certain individual under fixed conditions.
This document is taken into use within
international trade for the purpose of
provision of economic guarantee from a
creditworthy bank to an exporter of
merchandise.
Packing List: This can be referred
to as a document encompassing detailed
information about the products to be
exported together with their packing detail.
It is crucial to be prepared by exporters as
it provides the customers with information
regarding the goods ordered along with the
details of quantity.
Commercial Invoice: This can be
referred to as a legal document that stays
between the customers and suppliers,
clearly depicting the good which are sold
along with the due amount on customers
(Wattanakul, Nonthapot and
Watchalaanun, 2019). It is regarded to be
one of the most crucial and important
documents which are taken into use by
customs for determination of custom duty.

Different methods of tapping into
new international markets,
including limitations and benefits
There are number of methods for
expanding business into new international
markets. It is basically done for increasing
business in a market area. Strategy of
market expansion generally depends on the
size of the market in which the business is
trying to tapping on. Evaluation of
methods for expanding business in
international markets is discussed here.
Accessing markets: It is basically
an evaluation of potential of the new
market or new business idea. Evaluation is
done through comparison of business
factors such as market trends, competition,
risks and opportunities. It is the most
crucial step of tapping into new
international market (Wu and Park, 2019).
Benefit of this method is that it helps the
organization to gain a better understanding
of market and target customers. It also
helps in to strengthen the overall business
position in market area. However, there are
some limitations of this method such as
some organizations misidentify market
needs and step back to expand their
business into new markets. It may
sometimes lead to misinterpretation of
data.
Financial support: Organizations
can take financial support for taking their
business to a new level. They can get this
support from number of funding options
such as getting a loan from bank, asking
with investors, try crowdfunding and many
more. It will have proved to be beneficial
for business to arrange all the necessary
resources that will be required for running
the organization effectively (Wattanakul,
Nonthapot and Watchalaanun, 2019). It is
beneficial for the business for raising
capital and provide necessary tools for the
business. Unlike benefits, there are certain
limitation of this method such as it can
sometimes lead to conflict between
business partners regarding money matters.
If the business got fail in the new market,
there are chances for facing a huge amount
of loss.
Ways by which SMEs can tap into
international markets, assessing
their pros and cons
Entering of SMEs into new
international market can be tricky as the
business needs to adapt a whole new
culture, new competition and a new
regulatory environment. There are number
of ways for take a jump into an
international market. Some of them are
mentioned here.
Joint venture: It is one of the most
popular method where two business
basically combine with each other to sell
their services and products (Kogut, de
Mello and da Rocha, 2019). Joint venture
has number of pros such as it gives an
opportunity to business to attain new
expertise and new insights. It gives an
access to business to utilize better
resources such as technology and experts.
Cons of this method is that flexibility is
often restricted in joint venture and there is
no equal involvement.
Exporting Directly: Some of the
SMEs use this method for avoiding other
methods such as licensing or attempting
for a partner that proved to be complex at
times. Companies directly sell their
services or products to exporters oversees,
through which they supply their products
to their target customer. Pros of this
method is that it creates a better
understanding of market area and help
business to enhance their marketing
efforts. Cons of this method is that there is
a requirement of more energy, time and
money. It needs a large work force and

there is no scope of any buffer zone if
something wrong takes place.
References
Ibeh, K., Crick, D. and Etemad, H., 2019.
International marketing knowledge and
international entrepreneurship in the
contemporary multi speed global economy.
International Marketing Review. 36(1).
pp.2-5.
Wattanakul, T., Nonthapot, S. and
Watchalaanun, T., 2019. An Analysis of
the Competitiveness and Market
Expansion of Thailand's Rubber Smoked
Sheet Exports-A Technical Note.
Australasian Accounting Business &
Finance Journal. 13(4).