38
Developing an Export Plan and Selecting an Export Market Washington SBDC Export Center Sharon Sappington
Developing an Export Plan and
Selecting an Export Market
Washington SBDC Export Center
Sharon Sappington
Topics
• Export Readiness
• Developing an Export Plan
• Identifying and Selecting Export Markets
Export Readiness
Common Fears About Exporting
Good News
• SME companies CAN export.
• There are resources to help you.
• The Washington Export Outreach Team works together - there is “no wrong door" for businesses seeking help in exporting.
Where to start
• You’ve decided your company has the right conditions for exporting, there’s demand for your products in foreign markets, and you’re prepared to get started.
• First steps - determine your company’s Export Readiness and create an initial Export Plan.
Why Evaluate Your Company’s Export Readiness
Helps you determine your company’s level of preparedness to start or grow exports.
• Defines the scope of company knowledge and capability
• Reveals knowledge gaps and areas that need strengthening
• Helps to set a path forward for your company to engage in exporting
Road Map to Successful Exporting The WSBDC Export Center’s Road Map Approach
is designed to help clients become successful and sustainable exporters
EVALUATE EXPORT
READINESS
PRODUCT KNOWLEDGE
MARKET OPPORTUNITY
OPERATIONS COMMITMENT
FINANCE CAPABILITY
DEVELOP EXPORT PLAN
CUSTOMIZED EXPORT PLAN
MARKET FIT ANALYSIS
MARKET ENTRY STRATEGY
EXPORT PERFORMANCE
METRICS
EXPORT COMPLIANCE
IMPLEMENT EXPORT PLAN
EXECUTE EXPORT PLAN & Review
Performance
IDENTIFY Under-Performing Export
Processes
ESTABLISH CLEAR Performance
Metrics
IMPLEMENT Best Practices For Exporting
STRENGTHEN MARKET POSITION
BUILD Stronger Links with End Users
INCREASE Channel Loyalty & Distribution
Enhance Terms of Payment
Expand Market Enter New
Markets
NEW
TO EXPORT
NEW TO
MARKET
EXPORT
READY
Road Map to Successful Exporting
EVALUATE EXPORT
READINESS
PRODUCT KNOWLEDGE
MARKET OPPORTUNITY
OPERATIONS COMMITMENT
FINANCE CAPABILITY
DEVELOP EXPORT PLAN
CUSTOMIZED EXPORT PLAN
MARKET FIT ANALYSIS
MARKET ENTRY STRATEGY
EXPORT PERFORMANCE
METRICS
EXPORT COMPLIANCE
IMPLEMENT EXPORT PLAN
EXECUTE EXPORT PLAN & Review
Performance
IDENTIFY Under-Performing Export
Processes
ESTABLISH CLEAR Performance
Metrics
IMPLEMENT Best Practices For Exporting
STRENGTHEN MARKET POSITION
BUILD Stronger Links with End Users
INCREASE Channel Loyalty & Distribution
Enhance Terms of Payment
Expand Market Enter New
Markets
NEW
TO EXPORT
NEW TO
MARKET
EXPORT
READY
The WSBDC Export Center’s Road Map
Export Readiness Starts Here
EVALUATE EXPORT
READINESS
PRODUCT Knowledge
MARKET Opportunity
OPERATIONS Commitment
FINANCE Capability
Has your company successfully produced,
marketed & sold products and/or services in the
U.S.?
Has your company received purchase inquiries
from foreign buyers or identified foreign market
demand for its products and/or services?
Does your company have top management’s
commitment to provide direction, financial support
and critical resources to enter foreign markets?
Does your company have a business plan with
secured financial resources that will fund its
market entry and export activities?
How to Evaluate your Export Readiness
Do the Export Readiness Assessment on WSBDC Export Center’s website.
https://export.wsbdc.org/survey
You will receive your readiness score and identification of areas that your business may need to strengthen.
Developing Your Export Plan
Why Develop an Export Plan
• It’s not merely a document. It’s a TOOL to properly evaluate all factors that will affect your company's ability to go international.
– Helps define your export aims and match resources to those aims
– Identifies actions needed to become export-ready, develop or expand exports, and how much it will cost
– Essential in any application for financing
• Ultimately it will become a part of your company’s overall Business Plan.
Write Your Own Export Plan!
• Your strategy and export plan is uniquely yours.
– Do not borrow another company’s plan and simply change the names and numbers
– Write it in simple language
– Make sure it reflects what is important to your business
– It needs to demonstrate why and how your business will be successful and provide strategies for overcoming challenges
• The first draft may be quite short.
– Over time it can be revised and refined, with addition of new information, market data, and planning elements,
becoming a more detailed, functional plan
Road Map to Successful Exporting The WSBDC Export Center’s Road Map
EVALUATE EXPORT
READINESS
PRODUCT KNOWLEDGE
MARKET OPPORTUNITY
OPERATIONS COMMITMENT
FINANCE CAPABILITY
DEVELOP EXPORT PLAN
CUSTOMIZED EXPORT PLAN
MARKET FIT ANALYSIS
MARKET ENTRY STRATEGY
EXPORT PERFORMANCE
METRICS
EXPORT COMPLIANCE
IMPLEMENT EXPORT PLAN
EXECUTE EXPORT PLAN & Review
Performance
IDENTIFY Under-Performing Export
Processes
ESTABLISH CLEAR Performance
Metrics
IMPLEMENT Best Practices For Exporting
STRENGTHEN MARKET POSITION
BUILD Stronger Links with End Users
INCREASE Channel Loyalty & Distribution
Enhance Terms of Payment
Expand Market Enter New
Markets
NEW
TO EXPORT
NEW TO
MARKET
EXPORT
READY
Areas Critical to Developing an Export Plan
Research and obtain data that confirms real
foreign market demand with end-user pricing that
will return acceptable profits.
DEVELOP YOUR EXPORT PLAN
CUSTOMIZED EXPORT PLAN
MARKET FIT ANALYSIS
MARKET ENTRY STRATEGY
EXPORT PERFORMANCE
METRICS
EXPORT COMPLIANCE
Select reliable market entry methods that will
minimize risks and support distribution & market
growth opportunities.
Define company’s market opportunity, ROI and
capacity to deliver.
Establish realistic and relevant performance
metrics that help evaluate export business
initiatives.
Be aware of current U.S. export requirements and
establish a compliance program & procedures.
Basic Export Plan Outline 1. Company Profile
2. Current Export Status
3. Product Focus for Export
4. Foreign Market Demand
5. Current Export Resources, Functions and Requirements
5. Target Market Country Profile(s)
6. Market Entry Strategy
7. Market Development Action Plan
8. Budget for Marketing, Sales and Service
Export Plan Resources
• Online Export Plan Resources:
• Local Resources: Certified Business Advisors and International Trade Specialist at www.wsbdc.org/ The Washington State Small Business Development Centers
SBA’s Export Business Planner link http://www.sba.gov/sites/default/files/SBA%20Export%20Business%20Planner.pdf
Identifying and Selecting Export Markets
Two Types of Market Selection
• Reactive – Many companies begin exporting this way
– Hit and miss haphazard process
– Selling to unqualified foreign inquiries
– Unknown competitor activities
• Proactive – Disciplined collection of market information
– Thorough comparative analysis
– Selection of best market for company
Factors that will Impact your Selection of Markets
• Types of government (Tariffs and Political Risks)
• Cultural Awareness
• Existing Trade Agreements
• Degree of competition
• Distance to Market (Landed Costs and Transportation)
• Market size
• Cost of developing the market
• Product adaptation requirements
and many more
Market Selection Has Four Essential Steps
1. Research to obtain information on potential export markets
2. Make comparisons between the different markets
3. Prioritize markets
4. Select market
Research is Key to Foreign Market Selection
Researching potential markets help you identify and determine:
• Where your product is most likely to sell
• Specify market segments and pricing
• Domestic and international competitors
• Trade channels and how you can access them
• Market risk and trade barriers
Approach to Researching Potential Markets
1. Develop short list of potential markets
2. Create structured research outline
– Based on your comparison criteria and key indicators (demographic, economic, trade, industry, environmental)
3. Research and gather information
4. Dig deeper than the basic facts and figures
– Seek out practical advice from trade specialists and at market-specific seminars
– Speak with people operating in markets
of interest
Other Questions to Ask as You’re Gathering Research Information
• What are your key success factors?
– Increased revenue, market share, experience, widening your brand?
• Who will your key competitors be?
– Narrow it down; you will be competing against only those of similar price points and distribution channels
• How will you enter and succeed in the market?
Compare, Prioritize and Select
• Analyze and compare overall fit – Market size, risk, competitors, cost, etc
– Distribution/sales channels and market entry modes that best fit your company and product
– Other opportunities that may have presented themselves
• Rank and prioritize the markets – Based on market potential and your available
resources
• Select your market – You are encouraged to think about targeting a single export opportunity
In addition to U.S. Government data bases and internet research sources, the WSBDC Export Readiness Center is provided access to private international data bases through the SBDC and
their Universities to seek out the information on behalf of the company.
International Market Research Resources
• Secondary (public & private)
– Existing data from whatever sources are available
– First course of research
– Can be a solid base on which to develop your primary research
• Primary
– First-hand foreign market information
– Detailed information on current market conditions, such as pricing, competing products and buyer preferences
– Most accurate way to research a market
Types of Market Research
Common Research Indicators
• Demographic – Population, literacy, education, per capita income
• Macroeconomic – GDP, growth, inflation
• Trade and Government – Tariffs, non-tariff barriers, political & economic stability
• Environmental – Infrastructure, climate, geography, transportation
• Industry – Market sales, competitors, distribution channels
Trade Barriers
• Tariffs (Import Duties)
– Some countries, notably Brazil, maintain high import duties
• Consumption taxes or value-added taxes
– (VATS) are not import duties
• Import licenses
– May apply because of currency exchange controls or required for products that need pre-market approval (sometimes considered
non-tariff barrier)
Non-Tariff Trade Barriers
• Government standards & product certification systems
– Non-transparent and discriminatory product certification/approval systems can be a problem in int’l trade
• Import quotas
– Absolute quotas establish a strict import quantity limit on affected product
– Tariff-quotas establish for continued import of product beyond quota but at higher duty rate
• Services import barriers
– Some countries may limit or ban foreign firms from offering some services in their country (i.e. India restricts
legal services, Brazil restricts consulting services)
Product Specific Market Considerations
• International growth trends for your product – U.S. export statistics is one gauge of potential foreign
market size
– Growth trends in U.S. may or may not correlate to what is occurring in foreign markets
• Product adaptation and production – Product may need to be adapted to consumer
preferences or to meet product standards different from those in U.S.
– Meeting increased foreign market demand for your product may require expanding production capacity and shipping volumes
Product Specific Market Considerations (cont.)
• Industry structure in international markets – What are the marketing and distribution channels
needed to effectively serve the market
– These channels may be different then those in U.S. and methods new to your company may be required
– Unique products unknown in foreign market pose unique consumer education challenges
• Product warranty/recycling/waste disposal issues are mandated by some national/regional laws, such as in EU
and Canada
Understand the Competition
• Competing products: market percentage for domestic or imported products
• What are the competitors’ strategies
• How you will compete considering consumer demand factors: price sensitivity, product quality, brand recognition, after-sales service and product warranty
Scope of Involvement
Define scope of your company’s involvement in exporting. Will your company:
• Handle its own export business development?
• “Outsource” this function to an export management company or sell products to an international trading company?
• Look at licensing or franchising?
• Direct Foreign Investment
Final Consideration for Market Selection
• A Market Entry Strategy maps out how to sell, deliver and distribute your products in another country.
• Consider markets that have appropriate channels and require market entry modes suitable for your product, resources and capabilities. (direct/indirect exporting,
franchising, joint venture, etc.)
Now What?
• You’ve done your research, selected your target country, developed an initial entry strategy, and you’re feeling great about your export plan.
• Now you’re ready to look for your buyers!
WSBDC Export Centers
Western Washington EXPORT CENTER Located in Seattle/Everett - Serving all of Western Washington
Sharon Sappington [email protected] (206) 439.3785
Eastern Washington EXPORT CENTER Located in Spokane - Serving all of Eastern Washington
Vern Jenkins [email protected] (509) 358.7998
http://wsbdc.org/services/exports
