It’s quite common that a small company begins to export randomly, thanks to a personal connection of an entrepreneur living abroad, the passage of a tourist who appreciates the products, the participation in a local fair visited by some international buyers. Even if sometimes this is the start of something that evolves, thanks to the gradual knowledge of the foreign market and the arising awareness of its opportunities, into a significant and consolidated export, in most cases, these channels are lost or generate tiny turnover. There are many causes that contribute to impeding a sustained development of these export opportunities, citing among the most recurring ones:

• the opportunity arises from a personal relationship and not professional one: the referent often is simply pushed to help or pursues a business opportunity in a brand new industry so far unknown, making it impossible to plan a clear export route. In this context, moreover, the actors face difficulties in adapting the company proposal and in implementing an effective marketing plan, all obstacles that limit if not make impossible the development of this channel;
• the action does not focus on a geographic area or market: the company ships the goods where a request is coming from or rushes to adapt the goods for a specific market. This situation usually leads to customization costs or overall efforts afterwards not properly amortized due to the lack of a subsequent development of sales on the targeted market;
• The initial lack of knowledge of operating or legal barriers. One unstructured approach to export often generates actions that do not produce results because of underestimated or understated obstacles at the time of starting up the project: logistical problems, product certifications, customs barriers, local regulations, etc.

TO BE PREPARED THROUGH A PLANNED APPROACH

As outlined by the article “Getting ready to export: what to do before you leave”, a careful analysis and evaluation process before starting an export project achieve different goals:

1. define consciously the level of internationalization on the basis of development objectives, time frame, nature of sales targets, determining by consequence a detailed strategy and an estimate of necessary resources;
2. minimize the risks of investments through an analysis of the feasibility of the project, with the scope of moving action towards geographical areas with the highest potential, and highlight critical points for the sales expansion (product adaptation to local standards, certifications, logistic plan, post-sale service, etc.);
3. anticipate the sales action with possible corrective actions ensuring the full match to the needs of the foreign market before taking the first steps towards a marketing campaign, with the dual benefit of avoiding generating extra costs or starting project with the wrong approach (an incorrect initial business proposal could represent the loss of interest in the company brand by international buyers or cause a stop in the promotional campaign generating additional marketing costs);
4. determine the exact sequence of actions, in order to accelerate the export phase, identifying all necessary actions (market analysis, search and contact leads, assessment and preparation of logistics and customs processes, apply for required certifications, identification of suitable financial supporting tools, etc.), and placing them in a correct sequence in order to be ready once having settled an agreement, to start the carry out the orders without any delay.

FLEXIBILITY IN THE EXECUTION

The draft of an analysis and the plan of the international expansion must, however, be a fast-paced action, aimed at finding the main hindering or conditioning factors, and not a process too elaborate and detailed. In fact, the speed of the markets and the competitors, possibly disclosing sudden changes of the context, unexpected new requirements from the market or the introduction of new local regulations, might make obsolete certain data the internationalization plan is based on. Not to mention that highly analytical plans face high development costs and are likely to foster speed and flexibility, the two key factors in any international business plan.

Moreover, action versus planning approach has the undeniable advantage that any result or feed-back, as the mere collection of information if any export deal has been achieved yet, is reliable and true, a real added value in comparison with the projections and forecasts coming from the planned approach.

TOWARDS A WEIGHTED….LEAN EXPORT

Both approaches have undeniable advantages … then why not follow both of them? This solution is achieved by pursuing a rapid planning process followed by experimental action. It is in other words important to assess initially the conditions for a rapid market test, delivering in place, in the foreign market, product ready for sale enabling sales of a small amount providing immediate feedback from buyers or final consumers. We know that often the road is not that simple, because small quantities do not allow the optimization of logistics and product customization costs (although it is often possible to take short-term solutions limiting investments, such as print labels / packaging in small batches through digital technology, shipping goods through groupage shipping services, externalizing the first export stages to consulting companies to avoid overheads, etc .).

In other words, the firm cannot think that an experimental export can immediately repay the startup and marketing costs, but consider the likely negative balance between inflows and outflows as an alternative form of investment to the costs that a planned export would have endorsed.

The incurred losses, paradoxically, may be a sign of the sound approach to the hybrid export strategy, because if the company seeks an immediate profit source or expects a leading market position within the short term, the same strategy might end up with a totally different situation:

– “being in midstream” without being able to finalize ultimately sales, a typical scenario that could be avoided by the careful planning of the initial approach;

– setting up a pricing policy on initial costs and investment values (in practice by raising the price to cover the higher costs linked to first phase of export, usually driven by small quantities) making uncompetitive the product, and thus inhibits the expansion of sales and therefore the cycle of “lower price-higher margins” based on volume.

CONCLUSIONS

The choice of the described strategic approach applies in most cases, although it is not always suitable. There are industries or businesses whose proposals require necessarily heavy investment analysis and research, and vice versa, situations where, upon an ongoing active export carried out by competitors (showing an existing market for the products), most of the investigation can be shortened, restricting it to specific topics (for example, certification, logistics and customs assessments). But it is also true that where possible the experimental strategy, even in rare case where it might create higher expenses than those ones tied to the planned approach, has the advantage of ensuring high-quality feedback and shorter time to launch the first export.