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Thursday, January 7, 2016

Export Definition, Advantages and Disadvantages

Export Definition, Advantages and Disadvantages

What Exporting means?

Exporting in simple term is the sale and transport of a good or service to another country. It offers businesses the opportunity to build upon domestic success. But exporting is crucial to country's economic health, too. Increased exports mean business growth, and business growth means bigger profits for country's companies—and results in more jobs for country's workers.

Advantages of Exporting

Exporting can help your business to:

• Enhance domestic competitiveness
• Increase sales and profits
• Gain global market share
• Reduce dependence on existing markets
• Invest corporate technology and know-how
• Extend the sales potential of existing products
• Stabilize seasonal market fluctuations
• Enhance potential for corporate expansion
• Sell excess production capacity
• Gain information about foreign competition

Disadvantages of Exporting

In making a balanced decision, it’s important to note that there are certain trade-offs you can expect. These disadvantages may justify a decision to forego direct exporting right now, although your company may be able to pursue exporting through an intermediary. If your company’s financial situation is weak, attempting to sell into foreign markets may be ill-timed.

Your business may be required to:

• Use short-term profits to achieve long-term gains
• Hire staff to launch the export expansion
• Modify your product or packaging
• Develop new promotional material
• Bear added administrative costs
• Dedicate personnel for traveling
• Wait longer for payments
• Apply for additional financing
• Obtain special export licenses
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