SME’s DEVELOPING EXPORT MARKETS &

INTERNATIONALIZATION

GROUP MEMBERS:

Sizwe S.Mike D.

Gokul K.Jimmy

Subhi p.

TABLE OF CONTENTS

• CONCEPT OF EXPORT MARKETS

• CONCEPT OF INTERNATIONALIZATION

• DEVELOPING SMS’S EXPORT MARKETS & INTERNATIONALIZATION

• CASE STUDIES (1)

• CASE STUDIES (2)

• ACTIVITY

• CONCLUSION

EXPORT MARKETS

MEANING OF EXPORT MARKET

• Send goods or services to another country for sale.

• Spread or introduce ideas and beliefs to another country.

CONTD…

• “Exporting is a key aspect of international trade and involves the sale, purchase or exchange of goods and services across national border” (Export Business Guide, YEAR)

• Global value: $12 trillion annually

• World trade is dominated by merchandise in the form of manufactured goods, minerals and agricultural commodities

• Export of services has been increasing (20%)

EXPORT MODES

• Direct exporting

• Indirect exporting

• Countertrade

A SUCCESSFUL EXPORTING

• Make a commitment to exporting plan.

• Conduct research to find the right market.

• Devise marketing strategies for target market.

• Enter the market.

• Get your product or service to market.

• Explore financing options.

• Understanding of legal and regulatory issues.

• Put it into practice.

BENEFITS

• Promote growth.

• Exploit technology and expertise.

• Enhance competitiveness.

• Improve return on investment.

BARRIERS TO EXPORT

4

3

2

1 Lack of knowledge of best potential markets

Lack of finances for market research

Lack of staff for export planning

Effect of strong foreign competition among others

INTERNATIONALIZATION

MEANING OF INTERNATIONALIZATION

• With reference to the process models of internationalization, Welch and Luostearinen (1988) define internationalization as

• “as the process of increasing involvement in international operations”

FORMS OF INTERNATIONALIZATION

IMPORT EXPORT

LICENSING FRANCHISING

MODES OF INTERNATIONALIZATION

ADVANTAGES OF INTERNATIONALIZATION

• Faster Growth

• Access to cheaper inputs

• Effect on performance of enterprise.

PERCEIVED BARRIERS TO INTERNATIONALIZATION

INTERNAL• Price of firm’s products• High cost of internationalized• Quality of firms products• Qualified personnel• Specifications of firm’s

products• Language• Other barriers

EXTERNAL • Lack of capital• Lack of public support• Lack of information• Laws and regulation in

foreign countries• Cultural differences• Tariffs and trade barriers• (home and foreign

countries)

SMS’S DEVELOPING EXPORT MARKETS & INTERNATIONALIZATION

1. Feasible

Acceptable/Willing

Ap

pro

pri

ate/

Rea

dy

Resource Base

INTERNATIONALIZATION WEBEducational background, networks, cultural values, foreign competitors, Language, Visits

Attitude towards internationalisation.

The Overseas/Global Market.

Finance, Skills, Core Competences, Products.

SME OWNERMANAGER

ANSOFF GROWTH MATRIX

KEY MOTIVATORS TO INTERNATIONALIZATION

• Reactive stimuli:– adverse domestic market

conditions– opportunity to reduce

stocks– availability of production

capacity– favourable currency

fluctuations (local made cheaper)

– opportunity to increase the number of country markets and reduce market related risk

– unsolicited orders from overseas customers

.

• Proactive stimuli:– attractive profit/growth

opportunities– ability to easily modify

products for export markets– public policy programmes

for export promotion– foreign country regulations– possession of unique

products– economies from additional

orders• Managerial elements:

– presence of export minded manager

– opportunity to better utilise management talent and skills

– management belief in value of exporting

MCKINSEY 7S FRAMEWORK

Strategy

Structure

Systems

Skills

Staff

Style

Hard Elements

SoftElements

Shared Values

CASE STUDIES OF SMEs

www.leatherforbusiness.org.uk

Based in Kidderminster

Corporate leather gifts

Got unhappy with the Indian Suppliers

Established own manufacturing

100% owned subsidiary in 6 months

100 employees in first year

33% growth in UK sales.

Entered markets in Japan, Dubai, Tanzania, Kenya, local Indian House Business

markets.

COBRAUK LTD www.cobraukltd.co.uk

Factory in Waymills Industrial Estate, Whitchurch.

Products for the automotive interior sector

Global economic downturn, which reduced orders by 90%

New products – Help from UK trade and development(turn over increasing by 70%)

Won a major order to provide safety barrier nets, for a Swedish car manufacturer.

(8m EUROS over 7 years).

Moving to aviation industry, with lightweight airline seat ( Russian Aircrafts)

80% of annual turnover is from exports.( £2.35 m)

Expected rise in turnover £4m

www.guardiansss.com

Based in Vale Business Park, Evesham

Installs and maintains electronic-based systems in buildings such as

mental health hospitals, custodial suites and airports.

Provided a trial system at a mental health ward in Bentley Hospital, Perth, Western

Australia

Invited for a tender for the whole hospital.

Competitive contract which won the order and different hospital contracts in Western

Australia.

Demonstrated long-term commitment to its activities in Australia.

£ 400,000 worth contracts, which is estimated to increase by £ 3m

Expanding its services to other states in Australia.

Passport to Export Scheme was one of the helping hands behind the business.

INDUSTRIAL PENSTOCK

• Specialise in the design, manufacture and installation of penstocks and valves for fluid control.

• Based in Netherton, West Midlands with 9 employees.

• 2002 Exported in excess £1.8m and awarded a £2m contract

ENTRY TO EXPORTS

• One of the first West Midlands Business to join the UK Trade & Investments Flagship Passport to export scheme.

• Access International Markets.

• Developing International trade potential.

• Access to Information, advise, Mentoring and Support from UK staff at home and overseas.

RACHEL DORMOR CERAMICS

• Based in Staffordshire University, Leek road business Village

• Sells to over 20 high end boutiques and Galleries in the UK

• Invited to exhibit at the New York gift fair by the craft council

• (OMIS) Overseas Market Introduction Service report show 12 Potential agents

DEVELOPING IN THE MARKET

• Trade show access programmes

• Buyers, agents, distributors, and customers

• Raising a companies profile and testing new markets

• Financial support and potential partnership opportunities

ACTIVITY 1

INSTRUCTIONS

• Divide: Students into 5

• From your list, find the country that has the good that you need.(1-3 minutes)

• Form a circle and use the string to connect the first pair of trading.

CONCLUSION

• Identify you business needs and develop your companies export strategy

• Develop your export skills and cultural awareness

• Research on Market size and segmentation

• Regulation and legislation, customer need usage and attitudes, distribution channels, trends, competitor activity strategy & performance

REFERENCES

• Business Victoria (2008) Benefits of Exporting. Available at http://export.business.vic.gov.au/. [Last Accessed on 28th February, 2011].

• Oxford Dictionary (2011) Meaning of Export. Available at http://www.oxforddictionaries.com. [Last Accessed on 22nd February, 2011].

• Small Business Canada (2011) 10 Steps to Successful Exporting: Export Shipping, Financing & Regulations. Available at http://sbinfocanada.about.com/. [Last Accessed on 23rd February, 2011].

• Export Reference Guide (2009) Opening Doors to Export connects you to world-class export assistance. State of Victoria, US.

• West Midlands Chamber of Commerce (2010) INTERNATIONALISATION SUPPORT FOR WEST MIDLANDS BUSINESS. Birmingham, Midlands.

• Czinkota, M.R. and I.A. Ronkainen. (1988) International Marketing. Chicago: The Dryden Press.

• Welch, L.S and R.K. Luostarinen (1988) Internationalization: Evolution of a Concept. Journal of General Management. 14 (2) 36-64.

• Banerjee, D and Nikolaos, B (2010) Internationalization Process in developed and Developing Countries. Available at www.slideshare.net. [Last Accessed on 3rd March, 2011].

• Ellis R. and Williams C. (1995) International Business. Pitman Publishing, London.

• Strategies for internationalisation within SMEs : The key role of the strategic leader and the internationalisation Web. Available at http://web.anglia.ac.uk/aibs/geru/CIB_publications/CIB_Paper5.pdf . [Last Accessed on 5th March, 2011].

• Buckley, P.J. (1993) Barriers to Internationalization. Business and Economics. 79-106.

• Global Independence [Online]. Available at http://www.frontiernet.net/. [Last Accessed on 12th March].

• Czinkot (2004) The Drive to Internationalize. The Export Marketing Imperative. Thomson Learning: Texere.

• Ansoff, I. H. (1957) Strategies for diversification. Harvard Business Review, 35 (2), 113-124.