Planning Exports - Export Entry Strategies

Export Entry Strategies

Exporting the finished good or service represents only one of several strategies for entering foreign markets. Factors like high transportation costs or high tariffs could mean your merchandise cannot be competitive in a foreign market. Other ways may be open. Make sure that you explore all the strategies for bringing your goods to your customers outside Canada. Apart from shipping finished goods, you can enter into export markets by:

licensing designs or technology
investing in a branch plant
setting up a manufacturing joint venture in collaboration with a local firm in the foreign market

Your strategy can differ from country to country and from regional market to regional market. You could find, for instance, that you can easily sell your goods in the United States, but that your transportation and product tailoring costs make it difficult to export to Southeast Asia. A joint venture to manufacture in the region might make more sense. Alternatively, a wholly owned investment in a foreign branch plant may best serve your objectives in the region.

The best strategy for entering a market is one that makes your merchandise most competitive in that market. Consider the following in assessing your potential to compete in a target market:

tariff and non-tariff barriers
the cost of customizing the merchandise to meet local market requirement
currency fluctuations
transportation costs

While adapting to the market of the host country could significantly increase costs, the resulting increase in volume may make it worthwhile. Additional business contributes to the fixed costs of production even if the profit margin is relatively small.

Structuring Your Export Access Strategy

When structuring your export access strategy, make sure your management is in clear agreement on:

company objectives for both the medium and long term
tactical approaches to entering the market
marketing plans to schedule activities that will support objectives and tactics
allocation of resources for one- to five-year commitment to establish a presence in your target market
the export strategy may have to be modified to respond to changing conditions and opportunities