Trade Info

Following is some trade information you may find helpful. For further information please contact Pacific Business Intelligence Ltd. or follow the source links.

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MARKET RESEARCH (back to top)


The first step in developing an export market strategy is to undertake research about your target market(s). The more information you have the better able you will be to make intelligent decisions. In undertaking the research you need, as a minimum, to find out the following:

  • What are the economic and political risks in the market?
  • The potential size of the market
  • Who are your local/international competitors?
  • What are the distribution networks in the market?
  • What government rules do you need to know?
  • What is the appropriate marketing mix (price, place, promotion and product attributes) for the market?

Sources of information include:

  • The Internet
  • The Canadian Embassy in your target market
  • Trade Journals
  • Industry Associations
  • Host Governments
  • Canadian Businesses in the target market

Market research information (eg. demographics, consumer segments, emerging markets, trend analysis) is critical to success for domestic and international market success.

Finding market research information is now easy with the use of the internet. There are a large number of internet web sites dealing with the process of conducting market research, data bases of statistical data, the ethics of conducting market research and the how to of market research. Following are a few of the many sites you can access:

MARKET ENTRY (back to top)

Determining the best way to enter a foreign market can be the difference between success and failure in international business. The different market entry strategies are:

  • Using agents and distributors
  • Licensing agreements
  • Franchising
  • Joint Ventures
  • Consortiums
  • Strategic Alliances
  • Investing Directly

Most companies new to international trade activities use agents or distributors as they have direct market knowledge and usually a ready list of potential clients for your product. This process also costs the least and provides entry with very little risk. However, if your market research suggests there is a sustainable market the best entry methods are through manufacturing or marketing licenses or joint ventures with local partners. The two critical issues of license agreements are to hold on to your core technology/concept and to only license a specific technology or concept. Joint ventures (JV) are when two companies join together to form a third firm that will manufacture and/or market a product or service. Developing a JV is a long-term market penetration strategy. A good joint venture partner is one that brings a complementary technology or skill to the partnership.

For many firms the perception is that exporting is a simple matter of finding customers and selling to them. Going international can be a long and expensive process. Following is a quick checklist that management can use to determine if they are ready to enter the world of exporting. If your answer to many of the following questions is no then you need to revisit your decision to exporting and/or get professional assistance.

Management Commitment

  • Do you understand the benefits and costs of exporting?
  • Do you have clear goals and objectives for the export drive?
  • Is management willing to devote a significant amount of time to the export market?
  • Has management clearly identified individuals in the company who will be responsible for export marketing (e.g. an export marketing manager)?
  • Is management prepared to allocate sufficient funding to support the export drive?
  • Is management prepared to wait for the benefits of export marketing to be realized?

The Domestic Track Record

  • Does the firm have a proven, market-tested product or service?
  • Can the firm provide reputable domestic customers who will vouch for the quality of their product or service?
  • Is the cash flow from domestic operations sufficient to support the company's export operations for the time required to make them profitable?
  • Are domestic operations sufficiently well established to continue to thrive while management time is dedicated to the export market?

Market Planning

  • Does the firm have a written export market plan?
  • Does the market plan include specific, quantifiable objectives?
  • Have specific markets been selected?

Management Knowledge of Export Marketing

  • Does the firm have management-level export experience?
  • Is the firm experienced in the technical aspects of exporting?
  • Have company staff participated in or visited international trade fairs?
  • Are members of the staff familiar with foreign cultures and business practices?
  • Does the company have contacts in the export community?
  • Does the firm know where to get people with the right export skills?

The Finance Equation

  • Is the firm's present financial position sound?
  • Does the firm have a financial plan covering export market development costs?
  • Are sufficient funds available for exporting?
  • Is the firm able to wait for payment?

The Right Product/Service

  • Does the firm have a proprietary product or service?
  • Does the firm have a unique production process?

Gearing Up Production

  • Does the firm have established and efficient production for domestic markets?
  • Does the firm have initial excess capacity to serve export markets?
  • Is the company able to handle a sudden rise in demand?
  • Does the firm have a reliable supply system?
  • Can the company handle logistics of getting the product to export markets?

Source: http://strategis.ic.gc.ca

 

TOP TEN EXPORTING MISTAKES (back to top)

1. The company did not have the commitment or the determination to overcome the difficulties associated with exporting, and it lacked the resources to meet the financial obligations incurred during the initial stages of exporting.

2. Not enough attention was paid to choosing a foreign agent or distributor. The one chosen performed poorly and the company became discouraged.

3. In the first flush of enthusiasm, the company spread itself too thin, attempting to enter several different markets, rather than focusing on one and establishing a base of expertise and strength from which further efforts might be undertaken.

4. The company regarded exporting as a safety net, turning to it only when the domestic market experienced a downturn and abandoning it when domestic business recovered. It did not develop a long-term strategy or presence.

5. The company treated its foreign partners agents and distributors with less consideration than it treated its partners and associates at home.

6. The company refused to modify its products to respond to regulations or cultural preferences in its target markets.

7. The company attempted to operate exclusively in English and did not bother to provide itself with capabilities in the language of the target market, nor did it seek to produce documents in that language.

8. The firm attempted to do everything by itself instead of engaging specialists such as freight forwarders and Customs brokers to handle the technical details of exporting.

9. The company failed to investigate the potential benefits of partnerships, joint ventures and technology exchanges as a way of enhancing its export efforts.

10. The company did not gather all the necessary background information about the target market. It failed to devise a meaningful marketing plan before attempting to export.

Source: http://www.infoexport.gc.ca

 

HOW TO PARTNER (back to top)

There are five main options for a company wanting to do business on a global basis:

I. Set up a subsidiary in a foreign country;
II. Sign a technology licensing agreement with an overseas company;
III. Form a joint venture in an overseas market with a foreign partner;
IV. Devise a strategic alliance for R&D, product or market development with a foreign-based company; or
V. Acquire a foreign-based company that already has established product lines, customers and agents.

The key to all of these options is the research and the business procedure known as "due diligence." Without these preliminary steps, companies can find themselves committed to all manner of unanticipated commercial, legal and financial obligations. The results can be disastrous and costly.

Experts recommend that a company's management think through an "exit strategy" from the alliance. This is a precaution in case problems with a partner or other factors arise that challenge the viability of the arrangements. For example, exchanges of intellectual property materials need to be carefully regulated to avoid accidental disclosure of trade secrets. Ownership of jointly developed intellectual property also can create friction between alliance partners unless it is decided and agreed upon in advance.

COMPETITIVE INTELLIGENCE (back to top)

Competitive intelligence, or CI, is the collection and analysis of information about your competitor's activities and business trends. And knowing what the competition is up to is critical in making strategic decisions for the direction of your firm.

CI is not about spying or gathering information illegally about your competitors. In fact, according to the Society of Competitive Intelligence Professionals (SCIP) nearly 90% of all information you need to gather about your competition is available through public sources.

What sort of information is important to you in determining your competitors? According to the SCIP, you should know about new technology, new competitors, competitor actions, new markets, new legislation and marketplace changes. All of this information can be obtained legally.

What are the best sources of information you ask? In a 1997 survey undertaken by the SCIP the best sources included trade journals, on-line data bases, hard copy documents, employees, industry experts and trade organizations. Interestingly the least use sources of information by CI professionals included government records, suppliers, product purchasing, case studies and mail questionnaires.

For further information on CI and the SCIP visit their website at: http://www.scip.org

INTERNATIONAL TRADE SOURCES: (back to top)

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