The Deming Wheel provides a basis for defining the main stages in the overall export planning process, which are:
review the present position of the business relative to the exporting intentions and decide where the most appropriate export opportunities might be;
make a detailed investigation of the chosen export market to obtain a clear idea of the market entry options;
determine which is the most appropriate approach to entering the export market and establish the plan of action;
You may be unsure about where to begin the process of selecting your export opportunity and, of course, you will be keen to find the most appropriate starting point and avoid making the wrong choices. Exporting is not simply a question of expanding your firm’s geographical boundaries; it is also about widening your horizons and thinking beyond what you currently do.
Often it is not a lack, but a wealth, of opportunity which presents the first time exporter with a problem; in this situation you are advised to narrow and limit your choices. Resist the temptation to leap at opportunities and over-stretch limited resources.
Market research is the key to reducing the degree of risk involved in selling into a new market. Before you begin any detailed market research you need to shortlist four or five of the most promising markets. You might do this initially on the basis of your own, your colleagues’ or professional export advisers’ knowledge of overseas markets. You should also ask yourself, “Do I really want to do business there?” Remember that if your export drive is successful you are likely to spend a significant amount of time in that country.
Typically, first time exporters are encouraged to look close to home for potential markets, and in particular at the markets of the European Union. In most cases this is sound advice. The most important area of the Union is the so called “Golden Triangle”, the area bordered by Paris, Cologne and Liverpool, which represents over three fifths of its population and wealth. The countries included (excluding the UK) are Belgium, France, Germany, Luxembourg and the Netherlands. These countries are traditionally the best export markets for UK firms.
Effective research comes from good preparation and planning. Recalling the principles of planning, the first step is to review the information you have and identify what gaps in your knowledge there are that you need to fill.
In assessing your export opportunities, you will have already carried out some preliminary research, which will have been sufficient to make an initial choice. However, it is extremely unlikely to have provided sufficient information to decide exactly how you are going to get into the market and precisely what approach you should take in terms of:
Having researched potential markets you will have realised that different ones have different distribution structures; the set up of the industry in the area you are targeting may be completely unlike that in the UK. Gaining a foothold in the market, then, involves being aware of how it operates. For example, buyers may place all their orders for your type of product at one particular annual trade fair or exhibition. Attending will be the only way to make sales; there’s no point in hiring an agent, however efficient he or she may be. Choosing a sound market entry method can save you time, effort and money, and ensure that news of your product reaches the right buyers in the marketplace.
This is the start of the next major phase of your export development. It’s time to pull together everything you have done so far and set out in detail how you are going to turn your intentions into reality - the marketing plan.
Based on the information you have been gathering you have selected a market that you feel represents a viable opportunity and have a fairly clear view of what you will be exporting. You have looked at the options for establishing a route into your export market and short-listed one or two that seem appropriate. This gives you the starting point for your export marketing plan.
Once you have got serious interest from potential customers it is likely that they will expect you to provide a quotation and explanation of price breakdown before they are willing to place a firm order. This is not quite as simple as it sounds. To where do you deliver the goods? When does your customer take over responsibility for them? Your customers may be able to arrange transport more cheaply than you can, for example.
The method by which your customers agree to pay you will have an effect on the likely cost of providing the goods. You must also quote the agreed payment method in your sales quotation and sales contract. If your customer is desperate for your goods then you will be in a position to dictate terms - it is far more likely, however, that you will need to compromise on payment method.
Once you have agreed your payment method and determined whether you need insurance, you are able to complete your cost calculation and quote a price.
Developing countries may require insurance and freight to be contracted to their national firms or import restrictions may be present. You will need to familiarise yourself with these requirements before drafting the final agreements; it will save time, money and effort on both sides if the agreements are correct first time.
Most people’s experience of international transport is limited to sending the occasional letter or parcel long-distance. We tend to envisage exporting in terms of huge consignments thundering their way across continents, or crates being unloaded from exotic ports. All this can be difficult to relate to your need to send 50 small china ornaments to a distributor in Northern Spain. You may be surprised to find that much export trade is like yours - small or medium sized consignments, with their own special requirements, being transported to customers or agents all over the world. You may also be pleased to find that much of the vast range of help and advice available is geared to your needs.
If you are in business (or planning to be) then you are likely to have to contract with others in some way. It may be the contract you and your business partner(s) draw up together to set out the ground rules, a contract with a customer or supplier, or an employment contract should you take on staff. Other types of contracts may be loans or credit agreements, leasing agreements or hire purchase agreements.
CILT, the National Centre for Languages promotes the effective use of language skills for business.
CILT addresses the concerns of businesses wanting to access language services, such as language training, translation and interpreting. It operates the Business Language Information Service (BLiS) to make it easy to locate a professional language service provider.
CILT is establishing a UK-wide Language Network and aims to establish a Regional Language Network (RLN) in each of the 9 English regions, and in Scotland, Wales and Northern Ireland.
Different nationalities have different values and ways of behaving. You need to understand ritual and culture in order to make people of other nationalities more comfortable when negotiating with you. You may not even have to deal abroad to need to understand the ritual and culture of another society - many companies in the UK have settled here from overseas and strive to maintain their native beliefs and traditions.
