Global economic crises are the strongest proof that a company always must be prepared to face adversities. One of the most efficient ways to mitigate the risks associated with having the entire business investment in one place is to take the products or services to new markets; to export.
Diversification helps, among other aspects, to take advantage of the benefits that other markets may have (in addition to the fact that a greater number of consumers will be reached, and profits can be increased).
The Hartford states that one of the advantages of exporting is that it means “Diversifying market opportunities so that even if the domestic economy begins to falter, you may still have other growing markets for your goods and services”.
ADVANTAGES
Currently, there are foreign trade agreements between most countries worldwide, which seek to protect both parties (the one that exports and the one that matters), which makes doing business easier.
Although it’s a common belief that only large companies can think about exporting, that is not true. For example, according to Statistics Canada, many of the exporters in Canada are SMEs; 97.4 percent, to be precise. Nearly 41 percent of Canadian merchandise exports by value are exported by these SMEs. According to smallbusiness.alberta.ca, small businesses make up 95 per cent of all businesses in Alberta.
You’ll just have to choose what is the best option (speaking about new markets) for you and your business (a company is more likely to choose the right market if it has a clear picture of its business strengths and resources).
CHALLENGES
According to EDC Canada, “expanding into international markets is no small feat for a company that has never ventured beyond Canada borders. This is particularly the case for smaller exporters, who often lack the financial means and international business expertise to ensure success abroad. Naturally enough, these smaller firms tend to look at exporting in terms of the production, sales and distribution strategies that have worked at home. Unfortunately, these strategies may not work given the cultural, logistical, financial and marketing challenges of international trade. Taken together, these challenges present a company with a complex and unfamiliar context for doing business. Having a well-thought-out export strategy can help a firm fit itself into this new context and increase its chances of success overseas”.
Fortunately, Infinitus can help you to overcome all the challenges that come with the exporting process, from selecting the appropriate market for your business to build new commercial relationships in other international markets, we offer you a wide range of services that covers the whole process.
Contact us and let’s build together the best market entry strategy for your business!
SOURCES:
https://www.nibusinessinfo.co.uk/content/business-growth-through-diversification
http://publications.gc.ca/collections/collection_2016/edc/ED5-20-2015-eng.pdf
https://www.imd.org/research-knowledge/articles/diversification-key-to-global-expansion/
https://www.edc.ca/en/article/guide-to-trade-diversification.html
https://accessprosperity.ca/4-reasons-diversify-export-markets/
https://www.thehartford.com/business-playbook/in-depth/benefits-export-business