There are a few critical factors that will affect the export readiness of your business.
Each is explained along with some questions which you could answer in order to get an indication of your enterprise's export readiness.
1. Management's commitment to exports
Exporting requires quite a bit of your time, especially in the early stages of market development.
If you have a small staff that is already thinly stretched in handling your local business, it will be difficult for you to take on a new and serious commitment of exporting.
Are you able to commit a substantial amount of time to developing an international market in the initial stages?
Are you convinced that exports are an important aspect of your future survival?
Do you have a long-term view on developing your export market, meaning that, even if it took time before you succeeded in winning your first order, would you still remain committed to exporting?
Are you prepared to rearrange the way your business operates, should it be required, to become internationally competitive?
2. Management skills in international business
There are differences between doing international and domestic business. These differences lie in the methods of developing international markets, processing export orders, ensuring payment and dealing with all the risks involved. You will therefore need specific skills to do business in this way.
Do you have any experience, or have access to available expertise, in selling products to other countries?
Do you have any experience, or have access to available expertise, in processing export orders?
Do you have any understanding of the export procedure and knowledge of the various role-players involved in the process?
3. Financial resources
The commitment to export will rbequire additional finances, over and above the financial requirements needed to service your local market. If you are currently struggling with cash flow in order to keep your domestic operation going, you may have trouble finding the resources needed to start exporting. Your business may have to accommodate a time lag between when you start promoting your products abroad, and finally achieving your first order. You might even have to do the first few orders at very little or no profit.
Do you have (or have access to) adequate financial resources over and above your local needs to support an export market development programme? (International market development is often more costly than in the domestic market.)
Can you afford to fund you export market development for at least 12 months without receiving returns?
Can you afford to invest in adapting your product or packaging if required?
4. Technical know-how
International competition means competitors' products measuring up against one another, resulting in a constant striving to improve functionality, design and efficiency in order to keep existing or to win new market share.
Does your business or do you have access to the technical expertise required to ensure that your product is suited to international markets in terms of design, quality and function?
Does your business undertake research and development to improve your product?
Are you familiar with the attributes of the products of potential international competitors?
5. Capacity to supply / manufacture
Enterprises should take care in developing new markets if they do not have the capacity to supply the needs they create. Common problems include offering products to buyers who are likely to place orders far larger than the enterprise can ever supply or where enterprises export excess capacity in times of a poor economic climate at home, but then have to sacrifice their export markets once the local economy picks up again. The cost and commitment required to develop an export market is too high to give up just because you have run out of capacity.
Do you have spare capacity to produce over and above your domestic market needs?
Can you increase your capacity to produce at short notice and without any major capital investment?
6. International marketing intelligence and know-how
The desire to develop an export market usually results from some form of intelligence being obtained by the enterprise, giving it reason to believe that there is an international market for its product, and that it has a chance to compete. This knowledge is vital in selecting markets and initiating the market development process.
Do you have any current knowledge of international competitors, their products or prices?
Do you have information on the size of the world market for your product?
Do you have any knowledge of potential buyers for your product?
FOR EVERY "YES", GIVE YOURSELF 1 POINT AND FOR EVERY "NO", GIVE YOURSELF 0.
MANAGEMENT COMMITMENT X 4 =
MANAGEMENT SKILLS X 1 =
FINANCIAL RESOURCES X 4 =
TECHNICAL KNOW-HOW X 3 =
CAPACITY TO SUPPLY X 3 =
MARKETING INTELLIGENCE X 1 =