EXPORT PROMOTION ORGANISATION
In briefest terms Export is the process of earning profits by selling products (or services) in foreign markets. It is finding customers a industry can serve better at competitive price than the suppliers in their own countries. Intentional marketing is the performance of business activities that direct the flow of goods and services to consumers or users in more than one nation. It is different than the domestic marketing as the elements social aspect involved such as the behavior pattern of consumers, customs, attitudes, values etc, varies from one nation to another.
In developing countries where there are often severe shortage of capital, managerial resources and skilled labour, promotion of SSI sector is considered to be an important approach to economic development. In fact in many of not most developing countries, small or very small enterprises are the largest employers, providing a productive : outlet for the entrepreneurial spirit of individuals and assisting in dispersion of economic activity through out the country. The economic impact of SSls can be measured by their contribution to out put, employment, income, export, investment and other economic indicators.
There is general acceptance of the belief that the potential for increased exports by SSls in developing countries ; is significant, but only a small proportion of SSls is currently exporting and a vast majority of SSI produces exclusively for the domestic market. Nevertheless, their contribution to exports is substantial, as high as 50% of total export (36% approx, in India) in some developing countries. It appears probable that as the [proportion of exporting SSls rises,
national export would rise dramatically.
Now withstanding the magnitude in terms of value and numbers, the contribution of SSls in export is still inadequate, when seen as a proportion of total SSI output. One reason for this could be the attractive size of the home market and, at the micro level, a lack of sufficient initiative in an SSI to get in to exporting.
Though the SSI sector has it's own inborn strength to expand and export but it has to ultimately compete in the market with the large or medium scale industrial giants to survive and grow so, there are few major speed breakers on the path of growth in front of SSI as compared with large industries, these can be viewed as below : -
¨ Availability of finance : SSls may be unable to graduate to the 'large' category because they do not have access to funds needed for expansion. Financing institutions and banks are generally more cautious in advancing resources to small units.
¨ Level of innovation : While large units are capable of establishing in-house research and development facilities for experimenting with new products, new production techniques and new marketing devices, SSls generally handicapped in this regard and require outside support. Many SSls have to operate in environments in which there are very limited foreign business elements, such as business trips abroad, foreign visitors, or exposure to foreign products. Consequently they are deprived of opportunities to compare their products with others and thus Jack an important business stimulant.
¨ Managerial capabilities : Many small units are one-man or family businesses and tend to centralize decision making in one or two persons. For them, a decision to go into exports requires modifications in terms of management, marketing organization, production and finance, The entrepreneur or manager of the SSI has, therefore, to tackle these internal issues even before the full range of external problems unfolds when export markets are explored. On the other hand, llarger units are able to recruit competent professionals and build up an Organisation, which has self –propelling momentum, even when circumstances change continually in the export markets.
¨ Attitude to human resource development : The propensity of small and medium business to undergo training is notably low, even when training events are highly responsive to their practical needs. Large businesses have a better organised approach to human resource development in the interest of professionalism.
¨ Level of awareness : As compared to large enterprises, most SSls in developing countries suffer from lack of information about the potential of export markets. Even selling products to other regions of the home country may pose for them serious managerial and logistical problems. In addition, they lack guidance for making a self assessment of their inherent export capability and advice on how to take the first critical steps to exporting.
¨ Output levels : Inability to expand output significantly and to fill large orders may discourage buyers from buying SSI products.
On the other hand, SSls can possess many advantages:
¨ Flexibility : The major advantage of SSls is that they tend to be more flexible and are better in adapting to change than their larger counterparts. A factor that seems to be common to all successful exporters is that they can adapt themselves to an opportunity abroad and organize themselves efficiently to exploit it
¨ Quick Response : Having fewer levels in the organization, the speed of decision making is faster in SSls and their response to new opportunities is quicker.
¨ Customization : An SSI can customize its product to the buyer's needs with greater ease by means of small production runs.
¨ Risk taking : Greater enterprise and risk taking may be possessed by an SSI owing to high aspirations of its principals to succeed and excel in business.
The purpose of comparing the strengths and weaknesses of SSls and large units is to shortlist the areas where SSls require support in their attempt to enter the export field.
It is evident that increase in the numbers of exporting SSls requires:
· Strengthening of management capabilities.
· Training of managers in principles of export marketing.
· Assistance to gain footholds in export markets.
· Assistance in overcoming resource barriers for export expansion.
For entering in to the global market it is essential for an existing SSI to assess its export potential. Export potential is the ability to take advantage of sales opportunities abroad. There are both internal and external factors that affect the export potential of an enterprise.
¨ External Factors : Although much of the export initiative lies with the individual SSI, the importance of environmental circumstances in which it operates can not be denied. These circumstances tend either to facilitate or hinder export initiation and success of SSI.
¨ Comparative advantages : The inherent strengths of your country will shape your export opportunities. The particular resources, location, climate, and the cost structure of the economy, among other things, will set the stage for individual SSls to exploit their own competitive advantages.
¨ Government policy : The public sector makes up an important part of the export infrastructure in your country. It also plays a significant role in aiding export efforts. Governments may encourage exporting through a variety of tax policies, financing schemes, providing information, and incentive programmes. They may also hinder exporting through bureaucratic red tape, restrictions on imports, foreign travel, advertising abroad, etc, and other means.
¨ Exchange Rates : The relationship between your currency and that of your export customer 'floats', i.e., changes continually. As your currency weakens, it gives you a competitive edge in export markets. As it strengthens, you may lose competitiveness.
¨ Export opportunities : Exporting succeeds when there is a good fit between your product and your market. That means when you are able to respond to an export opportunity with exactly the product benefits the export
customer wants. Opportunities for marketing your products always develop in specific export markets. It is up to the SSI to capitalize on them.
Internal assessment of readiness to export :
A considerable amount of research and applied work suggests that an individual enterprise's export potential can be summed in two independent dimensions:
1. Organizational readiness to export (ORE) : A number of factors, internal to the organization, determine how well equipped it is to engage in export transactions. These generally relate to the resources of the enterprise, commitment of its senior management / principals to exporting, and its motivations for going international.
2. Product readiness to export (PRE) : Independent of organizational readiness to export, an enterprise must be able to offer products tailored to its customers abroad. The ability of an enterprise to meet export customers needs in a competitive and effective manner reflects its Product Readiness to Export (PRE).
Measuring organizational readiness :
Specific factors, which make up Organizational Readiness to Export (ORE) are as follows :
1. Manufacturing capacity : There should be plant and equipment sufficient to supply the home market plus additional capacity to meet demand from abroad.
2. Management and organitation: Exporting requires additional management time, especially in the early stages of market development. If the existing management structure is already thinly stretched to handle domestic business, it will be difficult to take on the new commitments resulting from exporting. Similarly, the existing organization may not be suitable for handling export sales.
3. Financial resources: Marketing abroad requires additional working capital, and capital for market investigations, promotion, product adaptation, and so on. It would be unwise to begin exporting if the company's financial base is barely sufficient to handle domestic business.
4. Technical know-how : An enterprise that has the technical manpower capable of product development and adaptation is likely to have a greater export potential than one without such capabilities.
5. Marketing know-how: Although marketing expertise gained in the home market is not always directly applicable abroad, we find that enterprises with substantial home market experience are better in adapting to the requirements of export business. In a way, successful marketing at home prepares the enterprise for successful export marketing.
6. Export experience : An enterprise's export performance to date and the lessons learned from past successes or failures have a bearing on its export potential.
7. Management's goals and priorities: Management's current plans for its domestic business, e.g., investments, new product launches, expansion of salesforce, etc., have a direct relationship to its export potential. These require resources and management effort, which may limit the enterprise's ability to develop its export business.
Measuring product readiness
Product advantages carry over to the export market as well. If the SSls products are successful in the domestic market, competitively priced, up-to-date in-design arid engineering, appealing to the selected customer segment, marketing opportunities abroad are likely.
To assess the SSls Product Readiness to Export (PRE), it must look at its products critically, and identity their inherent strengths and weaknesses. Besides, it must do the same analysis in the context of the target export markets.
Thus the task of taking decision to enter in to global marketing can be conceptualized as certain vital steps. First of all the commitment to go for international business. Once this basic decision has been accepted as the organisation motto next is to carry out the SHOT analysis. The analysis consists of evaluating the strength, weakness, opportunities and threats of a company against the perspective internal, external and international parameters. The result of this analysis will help in reaching a conclusion with regard to (i) which market to enter (ii) which particular segment (iii) how to enter and (iv) how to market. Once the decision has been taken on these, the company will be in a position to set the targets in terms of market penetration, sales volume or product awareness relative to specified time horizons. Then next step would be to develop organisational system to carry out the international marketing functions and to make adequate resources available to make the functioning effective. The next step involves the carrying out of the actual job international marketing. And, the final step is to review, identify the mistakes, if any, modify the system, if required, and set targets for the succeeding period.
Anti Dumping action initiated by Directorate General of Anti – Dumping
& Allied Duties during 2002-03
The concept of duping & subsidization has long been known. However, with the removal of QRs and lowering of tariffs, it is only recently that the injurious effect of dumping has been felt by the domestic industry leading to filing of more complaints before the designated authority i.e. Directorate General of Anti-Dumping & Allied Duties (DGAD). India has taken very effective anti-dumping measures to redress injury caused to the domestic industry on account of dumping. To this end, the investigative process has been streamlined. Besides, expediting and streamlining the procedure of investigation, DGAD has also initiated various measures for dissemination of information on the anti-dumping laws, practices & procedures in the country. DGAD has recently brought out their Annual Reports for the year 2002-03, highlighting their various achievements against dumping of foreign goods in the country.
For details visit http://commerce.nic.in/dgad/ann)rep2003.pdf