Q:

What are the pros and cons of exporting?

A:

Quick Answer

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.

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Full Answer

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.

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