Advantages of exporting include increased sales, gaining global market shares, diversification, lower cost per unit and expansion within the company. Disadvantages include extra costs, the possibility of needing to change products, payment collection complications and difficulties in getting reliable market information.Continue Reading
One advantage of selling overseas is the possibility of increased sales because the company's target market is larger. In addition, by widening its market scope and reaching out to a wider customer base, a business can deal in international market shares as well as national ones. By selling to multiple countries, a business spreads its risk and is not tied to the seasonal or economic fluctuations of a single marketplace. Finally, a company must hire more people to handle overseas operations and order more product to sell to international markets. This means that the size of the company will expand, and it can order more units and cut production costs.
Although there are many benefits of exporting goods, there are also disadvantages. In setting up an international branch, a company may face costs in making promotional materials, traveling and handling administrative tasks. Companies that expand overseas may have to modify their products to make sure that safety codes and import restrictions are met. It is also more complicated to collect payments abroad, and it may be hard to get reliable market information on foreign countries in order to make good business decisions.Learn more about Economics
Pricing policy refers to the way a company sets the prices of its services and products basing on their value, demand, cost of production and the market competition. Pricing policy is essential for all companies as it provides a guideline for creating profits and areas that bring in losses. Pricing policy goes hand in hand with pricing strategy.Full Answer >
In indirect exporting, a manufacturer turns international sales over to a third party, while in direct exporting, a manufacturer handles the export process itself. Manufacturers that engage in indirect exporting hire export management companies, distributors and commissioned agents or brokers to work as intermediaries with the end-users, retailers and distributors in the foreign markets. Direct exporting requires the manufacturers to deal with these foreign entities themselves.Full Answer >
A collusive oligopoly is an economic structure consisting of only a few producers, who typically form secret cooperative policies that aim to dominate a certain market, influence product-pricing and dictate market shares among competing corporations. The Organization of Petroleum Exporting Countries, commonly known as OPEC, is an example of a collusive oligopoly, where the production and pricing of oil is controlled by its member nations.Full Answer >
Reasons for product diversification include expanding into different market segments and expanding sales. Diversification can also help reduce risk, according to Inc. Magazine.Full Answer >