EXPORTS PROCEDURES AND DOCUMENTATION
1Q. Briefly discuss the modes of entering export business.
Export mode • Firms products are manufactured in the domestic market or a third country and then transferred either directly or indirectly to the host market. In establishing export channels a firm has to decide which functions will be the responsibility of the firm itself and which will be taken care of by external agents.
• There are two major types of export modes:
a) Indirect export: In this method an exporter uses the services of some specialized agencies such as merchant exporters and export houses or trading houses for exporting goods.
b) Direct export: It is the method of exporting goods directly to the foreign buyers by the manufacturer himself or through his agent situated in the foreign country.
Meaning of direct exporting
Direct exporting means you export directly to a customer interested in buying your product. You are responsible for handling the market research, foreign distribution, and logistics of shipment and for collecting payment. Such exporters are also known as manufacturer exporters. Even goods supplied on consignment basis are considered to be direct export.
The advantages of this method are:
The following are the advantages of direct exporting:
a) Profitability: Potential profits are greater because of elimination of intermediaries.
b) Direct control: Greater degree of control over all aspects of the transaction.
c) Direct contact: Customers provide faster and more direct feedback on your product and its performance in the marketplace.
d) Develop a better understanding of the marketplace.
e) Export incentives: Direct exporters get 100% benefit of incentives given by the government. In case of indirect exports, the benefit of incentives is
Disadvantages of direct exporting:
a) High degree of risks: Direct exporters are prone to more risks as they shoulder the twin responsibility of manufacturing...