- What are the benefits of exporting for the firm?
The restructuring of political borders in the world, the collapse of the Eastern Bloc, a divided Yugoslavia, regime changes in the some Middle East, the opening of new consumer markets, the formation of trading blocs, trade agreements and the establishment of the World Trade Organisation (WTO) have created new opportunities for export sales.
The worldwide availability of technology, which enables the emergence of competitive manufacturers capable of cheaper, faster and higher quality production, has affected the world economy that has today become global. Countries that were previously in the group of underdeveloped nations have become serious competitors to developed economies, thanks to the expansion of the network of communication systems across the world and the explosion in the fields of access to information through television, print and electronic media. There has never been such an opportune time to use it to its advantage. Therefore, for the following reasons, exporting is important for a firm’s growth and competitiveness.
When we look at the export and foreign trade opportunities in terms of Africa, we can see that international organisations such as MU, CEN-SAD, COMESA, EAC, ECCAS, ECOWAS, IGAD and SADC serve this purpose. Some of these organisations, especially COMESA, act as an important bridge connecting Egypt and South Africa to East Africa in commercial and economic terms.
Why we should do export ?
Increasing sales and profits: If the firm is performing well in the domestic market, its entry into foreign markets will likely increase profitability.
Getting a share from world markets: The company that opens to foreign markets will learn what its competitors are doing to get a share in foreign markets and their marketing strategies.
Reducing the dependence on the domestic market: By opening up to foreign markets, the firm will increase its marketing power and reduce its dependence on customers in the domestic market.
Keeping market fluctuations in balance: By opening up to world markets, the company will get rid of the general and seasonal fluctuations in the domestic market and the pressure created by changing consumer demands.
Selling excess production capacity: By exporting, the rate of capacity utilisation and the duration of production shifts can be increased. Thus, average unit costs are reduced and economies of scale are achieved.
Increasing competitiveness: Exporting increases the competitiveness of a firm and a country. While the firm will benefit by adapting to new technologies and methods, the country will also benefit from improvement of the trade balance.
Creating employment: Exports of goods and services will create new job opportunities and reduce unemployment.
Helping to reduce the foreign trade deficit: It will contribute to the reduction of the foreign trade deficit that occurs in cases where imports are higher than exports.
Reaching export experts: Many companies’ decisions not to export are based on fear of the unknown. Trade development organisations in the country have been established to help companies that have not yet entered foreign markets. These organisations assist companies at every stage of the export process.
The direct benefits of exporting to companies are as follows :
It gives the opportunity to expand its market share.
– If the capacity is not fully used in the domestic market, it provides the opportunity to increase production.
– It reduces the dependency on the domestic market or gives the opportunity to compensate for the stagnation in the domestic market.
– It gives the opportunity to spread the competition in the domestic market by entering foreign markets.
– Entering the foreign market by exporting tried and tested products in the domestic market reduces the cost of market research.
– Intense competition in international markets encourages exporters to adapt their products according to the needs of the market, thus improving the level of technological know-how.
Goals should be set big. As Michelangelo said centuries ago, “The greatest danger that awaits us is not to set big goals and not reach them, but to set simple goals and achieve them easily.”
For SMMEs, more esatablished sectors, and for general economic prosperity and continuous growth at the national level, it is necessary to focus more on exports and allocate resources in this direction. How world companies think, how their future strategies are shaped, why are new trade areas emerging, what will be the effects on us, what are the problems and solutions in foreign trade? These issues should be thoroughly analysed and the button should be pressed for export.
Exporting is also a team effort. I am in favour of everyone taking the responsibility with their knowledge and experience. I attach importance to the internalisation of this philosophy by company directors. Knowledge multiplies as it is shared, but first it is necessary to have knowledge and foresight. We need to learn to follow sectors and innovations closely, to knock on the doors of universities and research institutions, and to receive the contribution of all kinds of resources around us.
I have always said that having a global vision for export is the most essential condition. This vision can be developed over time by gaining different experiences. But first of all, a company should set a serious goal to open up to the world and apply its efforts in this direction. The next will come in order, like the links of a chain. In this regard, I sincerely wish success to African companies that want to export. I would like to note that the obstacle in front of them is only mental. Everything starts with taking the first step. The rest will come very easily.