Strategies for Exporting and Entering International Markets: A Guide

This report serves as a comprehensive guide for businesses, particularly Small and Medium Enterprises (SMEs), aiming to expand into international markets. It begins by outlining the advantages and disadvantages of various exporting processes, including direct and indirect methods, and discusses how to secure deals. The report differentiates between merchandise and service imports and exports, detailing required documentation such as letters of credit and commercial invoices. It evaluates different market entry strategies, such as exporting and licensing, comparing and contrasting their pros and cons. The report concludes with recommendations, emphasizing the importance of market research and understanding consumer needs before entering new markets. The report highlights that exporting is one of the best methods for SMEs to expand operations, increase production, and maximize profit margins.

Disadvantages: Direct exporting merchandise and services generally required more
monetary resources, energy, efforts and time that SMEs may not able to afford. In
addition, it also needs huge people power so to cultivate customer base and buffer zone in
this process is generally absent that are some of the disadvantages of direct exporting.
Indirect exporting processes: the another type of process of export in which
organisational goods are sell to intermediary firm that further sells the commodities to
customers through direct selling as well as importing wholesalers. By using the exporting
type, SMEs can transfer selling responsibilities to another firms that are known as
independent marketing middlemen. Using this method, an entities itself is not responsible
to collect payments form customers locating overseas.
Advantages: Indirect exporting generally demands low involvement of domestic
organisations in exporting process. When SMEs will adopt the process then they will
enjoy limited liability related to problems of product marketing and it is one of risk free
way for initiating an enterprise.
How to Start an Exporting Business
As a Business Adviser on International Trade for Barclays, they have to produce
brochure and it covers the various information and it about how business can expand their
business in the international market. Further discussion mentioned below:
Advantages and disadvantages of various exporting processes for exporting
merchandising along with services and ways a deal can be secured
Export is mentioned as process to trade internationally in which commodities
manufactured in one nation are shipped to other nations for the purpose of further sale
along with trade. Few exporting process types that Small and Medium enterprises may
use to send their manufactured items to other locations outside their nations boundaries
are as evaluated:
Direct exporting: The process includes exporting directly to purchaser who are
interested in buying the organisational products. It is one of effective process for selling
merchandising as well as services directly to international buyers and earning more
revenues. SMEs if wants to sell their goods directly to foreign customers then they are
majorly responsible to handle foreign distribution, shipment invoices, market research
and invoicing.
Advantages: Direct exporting provides huge advantages to SMEs as with this
process, they can avoid various costs as well as removes workings of middlemen which
provides more control on sales to the entity. Moreover, these enterprises can also
strengthen their customer base through direct interactions with clients and can develop
understanding of market in better manner.
Tapping into new and international Markets

Import merchandise and service is associated with bringing tangible goods addition to
intangible services within domestic country for satisfying needs of domestic population
but export merchandising and servicing are concerned with sending the commodities to
international nations for increasing revenues with sustaining growth.
Required documents such as letter of credit, packing list, commercial invoice, terms
of payment, customs document Exporting is a lengthy practice as it comprises various
steps. It begins with having export order that is type of written contract among exporter
and importer. It involves various documents that are send through exporter's bank as well
as other entities to importer's nation. Few of the documents that SMEs would require for
exporting commodities are as follows:
Letter of credit: It is a letter of undertaking or documentary credit which is used
in foreign trade in order to provide economic guarantee from bank of creditworthy to
exporter of commodities. In context to SMEs, with this document a guarantee will be
provided to seller or exporter by the importer to pay correct amount on predetermined
time.
Packaging list: the another document that identifies commodities in shipment as
well as involves weights and dimensions concerned with packages in terms of imperial as
well as metric measurements.
Commercial Invoice: It is one of legal document among customer and supplier
which illustrates sold commodities as well as due payment on customer. In relevance with
SMEs that wants to initiate export business, it is essential document that will be used in
customs for determining necessary custom duties.
Payment terms: The document that comprises relevant terms and conditions
concerned with payment amounts. Moreover, payment terms encompasses aspects related
to period for payment, method of payment such as cash on delivery, wire transfers and
many more.
Customs document: One of import document in exporting process that involves all
shipping documents which are needed for clearing the customs.
Disadvantages: Indirect exporting also has some disadvantages that SMEs have to face
while opting the process. The process results in lower profitability, limited control of
international sales, lose opportunities for tailoring offerings and long term overlook for
exports may change rapidly.
In order to have secured dealing with exporting processes, SMEs could use direct
exporting method as it assist in controlling sales transactions, understanding market and
customers ion better manner, intensive market cultivation, shorter channels, more
expertise within global marketing and providing goods on demand to end customer that
leads in secured dealings.
Differences among merchandise and service imports with merchandise and service
exports
Merchandise and service imports are said to bringing merchandise and services
into domestic nation from the international country. The commodities and services which
are shipped through boats or other transportation medium into home country is termed to
merchandise and service imports.
Merchandise and service exports are mentioned as sending or selling
merchandise and services to other countries from the domestic one. The goods and
services which are sold to other nations in international market is known as merchandise
and service exports.
Differences between the two are as follows:
Import merchandising and services represents high import level that is sign of
powerful domestic demand whereas export merchandising as well as service represents
huge export level that shows trade surplus.
Import merchandise and service are performed by companies such as SMEs for
fulfilling demand of commodities within home nation but export merchandise and
services are generally undertaken by SMEs for raising global presence as well as
covering international market for improving organisational image.

In context to SMEs, it is necessary for them to prepare customs documents which include
bill of lading, insurance certificates, airways bills and many more for clearing customs.
Evaluation of different methods of tapping into new international market and also
discuss its limitation or benefits
In order to entered into new market, organization has to adopt these methods
which discussed below:
Exporting: It is the process of selling commodities & services from domestic
market to international market. It is limited due to some elements such as transportation
cost, tariffs, government restrictions & barriers, market competition, local culture &
demand etc. Exporting can be two types such as direct or indirect, where direct exporting
will be done by the companies and they have better control over it. On the other hand, in
the indirect exporting intermediaries included such as Export trading companies (ETC),
Export management companies (EMC), Export merchants etc. It has some limitation as
well as benefits which discussed below:
Benefits: It helps in expanding business operation in the international market which
minimize the dependency on home country market. Greater production will maximize the
economy of scale and provide better profit margin.
Limitation: Loose the focus from domestic market in order to expand their business in
the international market. It maximize the administration cost due to with export
regulation because business trade outside of the European Union.
Licensing: It is the method of granting license to any other separate company to
manufacture goods or offer similar services by using company's name. International
licensing agreement allow the foreign companies to use their name and produce goods on
some fixed terms & conditions. Most of the organizations such as SMEs use this method
to tapping into international market. License of the home country makes limited rights for
the licensee in the domestic country. These rights & resources may include managerial
skills, patents, trademarks, technology, etc.
Benefits: It helps in generating extra income through licensing where it helps the business
to entered into new market. Licensing reduces the political risk because it is 100% locally
owned by the licensee.
Limitation: Licensing provide low income in comparison to other entry mode methods
and original companies may lose the control. Any wrongful activity will affect the
reputation of company which further impact their productivity as well as profitability.
Compare & Contrast various SMEs ways which can tap into international market
and also mention the pros & cons of each method
For the growth of economy, it is essential to encourage small organizations to
expand their business through tapping into international market. Comparison or contrast
the different ways to enter into international market along with its pros & cons. These
discussion are as follow:
Comparison: Exporting and licensing both are the different ways which help the
SMEs to tapping into international market. In the exporting, company sell their goods &
services in the foreign market and the other hand, licensee use the other company's name
to produce goods and sell in the domestic or international market.

Recommendations
From the overall discussion it has been recommended that exporting is one of the
best method for Small Medium Enterprises (SMEs) to expand their operations or enter
into new market to maximize their overall production as well as profit margin. Before
entering in the international market, organizations need identify the requirement of
international market where they wanted to expand and ensure that their goods & services
able to satisfy those customers or not.
It is the best way as well as good opportunity for SMEs to expand their business and also
make some good research before entering in the foreign market. Every nation has different
culture, consumers has different taste & preference, level of satisfaction etc. By using
exporting methods, it provide various benefits such as increasing sales potential, profit,
minimize the dependency, provide new opportunity through selling their goods or getting
new ideas as well. Licensing and franchise are the additional method of tapping into
international market. These methods required low investment or risk but it includes some
terms & conditions as per the organization which provide these options.
Contrast: Both ways of entering into new market has some similarities such as it help
the organizations to expand their operations as well as maximize the profitability. Both
methods used by the SMEs to expand their operations in the new market. It helps the
company to capture market share or increase their customers base. It will further
maximize the demand which automatically raise the production or profit margin of the
organizations.
Pros & Cons of Exporting: In context of SMEs, business reach with foreign
consumers through selling their goods & services in the international market. Before
using export system as entry mode, companies should have done some research regarding
market culture, needs of consumers. If consumers need is match with the goods which
they offer than it will maximize the demand otherwise it influences the production as well
as profitability. On the other hand, exporting will reduce the focus on their home country
which directly impact the production.
Pros & Cons of Licensing: Licensing is one of the suitable method for SMEs to
expand their operations without spending huge amount as an investment. It is the simple
or highly attractive way to tapping into international market. On the other hand, it has
some cons as well such as risk of having trademark and reputation ruined by the licensed
company. Foreign partners may become competitors because they sell products in the
same place where parent company also established and make their strong presence in the