Export Capabilities

Exporting your products and services to the world can be a great opportunity and requires great insights into some key topics which must be addressed before success can be guaranteed. Your export capability is an essential determinant in your export success. Businesses are required to consider their management quality, production capabilities, distribution channels, packaging, and communication skills.

As we can experience today, the business arena is gradually becoming more global and consequently dynamic, which leaves businesses with the task to balance their capabilities with the ever-changing demands and conditions of the global marketplace.

Businesses which are quick to trade off the development of more capabilities with the identification of core capabilities which can with no doubts improve performance in the international market place and an export competitive advantage.

For businesses to enhance export performance and to achieve competitive advantage in foreign markets, such businesses must apply four export variables to their various export capabilities namely; unpredictability, adaptability, innovativeness, and task-flexibility.

To begin with unpredictability, the global market scene is a very dynamic marketplace and things can change as fast as you can even be aware of. Natural or political factors can contribute greatly to making the market highly unpredictable.

With the high levels of unpredictability, how fast can your business adapt to support itself from any major business down-turn? In other to be able to succeed in the international marketplace, businesses must learn to adapt and have in place a strategy to minimize the risk involves at all levels of their export engagement.

Creativity and innovation are the most important factors to remain competitive in the global scene. What new experiences are you ready to take to the world? Innovation will only go a long way to enhance performance in the marketplace and place businesses at the forefront of their industries.

Task-flexibility will certainly improve work productivity with your export management team. When dealing with the export market, there is no specific task that needs to be done as different markets come with different obligations and requirements. Being able to be flexible with your tasks will keep you open to navigate any tasks the international market throws at you.

Given the above variables in combination with the key export capabilities, will guarantee your success and enhance performance in the global market place. We will get into building your export capabilities in the subsequent paragraphs;

Production Capabilities

If we have to look at the definition of production, it is the creation of a product or service by adding value to inputs through a transformation process in which the product or service can be made available for exchange in a marketable form and in a specific place.

With production capabilities to be built in accordance with an export strategy, businesses are required to focus on the following;

• The quantity of product to be produced
• The cost of production
• Time made available for the production
• And the quality of the product or service.

The production capabilities can only be valuable if the export strategy determines the characteristics of the offer to be produced and marketed in a specific market.

Different markets are known to come with different challenges and producing for an international market requires adequate preparation considering the fact that international market factors are quite difficult to identify and let alone predict.

Besides, producing for a domestic market is quite different from producing for an international market. Markets come with their own specific requirements, dis-likes and likes, and expectations that must be met. Always look at every market with a set of new eyes, as a separate entity with its own needs to satisfy.

Another important question to ask is; will producing for the international market meet the production strategy of the exporting company? Considering factors like differences in environmental and safety standards, quality standards, presentation, packaging, label, and specs?

Production Capacity

It is of prime importance to consider your current facilities and analyze the possibility to produce new products with new market characteristics and the possibility of expansion. With increase expectations in the international market, one cannot be very certain of the exact order quantity. What should be more important is to understand the capacity requirements and all other necessary resources that will be needed as you understand the market demand.

With first-hand knowledge of your production capacity, you can easily predict how much you can sell to the global market. This can help you make plans for production, financing, and marketing. With this information, businesses can make informed decisions on production modifications.

Another key consideration that will always be against you if you fail to plan properly is time. Capacity can be defined as the total unit of output produced per unit of time. How much can you produce in one day? If you miss the market “timing” or if your production facilities can’t meet the increased demand, your export endeavors will ultimately fail.

Meeting the required quality

The quality standards for an international market can be different from the domestic market. Certain markets will demand a certain quality standard before your products can be accepted in the market. In other to meet these requirements, you must set high production standards.

The end quality of your products will highly be determined by the raw materials used for production. Do you consider the environmental conditions for production? Are your employees skilled at their tasks and well trained? Are your packaging and product presentation up to the required standards?

When deciding on the production standards, it is important for all parties to agree on the approved standards. Such standards should be well defined and put in writings on the products, the company’s values, and in all departments of the company. These standards are to be measurable at all times and quality control procedures put in place.

It is also important to consistently monitor the required quality standards of the market for any changes. If there are any necessary changes the company’s standards should be revised accordingly and with immediate effect.

The cost of production

Your production capability for the international market will be greatly determined by your cost of production factored according to the market price of the interested market. Your cost of production and price of the finished product based on the EXW factory price or FOB ( Free on Board) terms should not be above the price of the product in the desired market and better still the price on CIF terms (Cost Insurance and Freight) should not be above the market price.

Before, you even start up your production “engines,” you must be able to understand the exact production cost per unit produced. You should be able to factor out all the direct and indirect costs of production. After productions, will you be able to sell at a price that will take home some profit?

For better profit margins, consider how you can increase the value of your product at a lower cost or better still provide the same value or product standard at a lower cost. Always stick to ever-improving your products in the global market in other to stay competitive and make more profits.

Export Quality Management

To enhance your export performance, you must pay attention to the quality-related issues, which may include; technical requirements, a comprehensive management system for conformity assessments, certifications, and accreditations. In simple words, it is very important to provide quality products and services to your foreign buyers and to put in this practice for continuous satisfaction.

Quality has always been a prerequisite for successful market access and the key for exporters to improve competitiveness. However, the challenge many exporters face is meeting all the technical requirements and especially with the proliferation, ever development or changes of standards in the global market.

Countries enforce a growing number of standards to protect the health and safety of their people and to meet the buyer’s specific needs. And exporters on their part, face the problem of non-tariff measures due to conformity assessment procedures, technical regulations, phytosanitary and sanitary measures.

Businesses seeking to export their products in new markets need to be up-to-date with information about the applicable technical requirements and adapt their products or services to satisfy the export market requirements and demonstrate strict compliance with them.

For a formidable export quality management, exporters must be able to understand the basic quality concepts and their benefits, the technical requirements, management systems to put in place, the conformity assessments to work with, metrology, and accreditations that can be valuable for their competitive advantage.

Understanding Quality for Export

Quality may mean “the degree to which a set of inherent characteristics fulfills requirements.” Requirements in this sense may mean the expectations or needs, generally implied or obligatory, of the interested parties usually suppliers, customers, and society.

Quality is oftentimes measured through an exchange between two parties. One receiving the product or service and the other supplying the product or service. In the global marketplace, the supplier and the buyer may have different views towards quality which may lead to misunderstandings and trade disputes. In this regard, quality can be understood as “the conformance with customers’ requirements or fitness for purpose”.

Exporters are supposed to understand two things when it comes to quality management. The first thing to note is, it’s the customer who defines whether a product is fit for use or not, and secondly, customers’ requirements change over time as their purchasing power increases and as more innovative products present themselves in the market. You can easily understand why you don’t see the 70s black and white huge tv screens anymore but color digital flat screen tv’s

In today’s business world, we can never talk about quality without mentioning “grade.” A grade can be described as the rank or better still the category which is specified to different quality requirements for products, systems, and processes having the same functional use.

With grading, quality comes with many dimensions like performance, features, reliability, conformance, durability, serviceability, aesthetics, and perceived quality.

The benefits of manufacturing a quality products and delivering a quality service.

Generally, by applying quality control measures and quality management strategies, you can attain higher quality conformance which is key for brand recognition. To be able to produce “right the first time and any other time,” waste can be reduced and consequently lower costs.

Your business will attract more satisfied customers with fewer issues and complaints about your products or services. More customers will request your product due to referrals and your business in a new market will grow as your brand name gets established in the market.

With lower costs resulting from the higher quality conformance which eliminates waste, the extra funds can be geared towards more research and development and to add more features to your product or service at no real extra cost and no added cost for the buyers. Design quality can be raised without any price increase.

With these changes, businesses can experience high sales revenue, gain market share, and a higher level of satisfaction for their customers. This can develop a cycle of continuous improvements through higher quality conformance, which will lead to a higher quality design again followed by a higher quality of conformance and again and again.

In the international marketplace, the winners and successful businesses will be those who can give services or products that are better in terms of quality, cheaper when considering costs, supply more efficiently when considering timely delivery and after-sales services.

Technical Requirements

Export quality management has a lot to do with technical requirements. When we talk of technical requirements, we mean standards. A standard can be best described as a document that depicts the characteristics of a product or a service. Such characteristics may cover aspects like size, weight, performance, interoperability materials, environmental requirements, production process, protocols, and even the service delivery.

When standards are being developed or put in place, the needs and desires of many stakeholders are considered and put first. This implies they are put in place with consensus principles in mind. This may mean, the standard will require the same demands on all suppliers and all consumers, and other external factors such as health safety and environmental factors are considered.

Standards can either be public or private and are published by international associations like International Organization for Standardization (ISO) the International Electrotechnical Commission (IEC) and examples for national standards can be the American National Standards Institute (ANSI), British Standards (BS), the Australian Standards (AS), and South African National Standards (SANS).

It is of prime importance for Exporters to work in accordance with their standards under their industry and pay close attention to the required standards in the country or markets they are exporting to because exports must always conform with the official requirements put in place by the governing power of the importing country and the commercial requirements of the buyer.

In addition, exporters need to understand there are specific standards for different industries. Most importantly, technical regulations and standards vary from country to country and sector to sector. Some examples can be like FDA, HACCP, ISO 22000 for the food industry, and the TC 38, ASTM for the textile industry.

Aside from the specified standards exporters are required to comply with technical regulations. The difference between standards and technical regulation is the fact that technical regulations are mandatory whereas with standards suppliers can choose whether to implement them or not.

Products can fall short and so endanger the safety and the health of the consumers, pose a negative effect on the environment, or offered in a way that buyers are highly deceived. To solve these problems, governments come in and set official controls suppliers must comply with them. A good example can be SPS (Sanitary and Phytosanitary).

Management Systems

When it comes to export quality management, it is important to set management systems to ensure that the quality requirements are being achieved. This can either be through a set of policies, processes, and procedures to ensure that the quality objectives for the company or business are being enforced.

Management systems may cover a broad array of business operations, with our focus on export quality management, we will be looking at the quality management systems, the environmental management system, food safety management system (food sector).

Quality Management System

The quality management system is a collection of a company’s processes designed to consistently meeting customer requirements and improving or enhancing their satisfaction. The quality management system of a business needs to be aligned with the business purpose and the strategic direction.

With recent developments, the quality management systems have been pointing towards sustainability and transparency initiatives due to the fact that perceived quality, customer, and investor satisfaction today heavily depends on sustainability and transparency.

In the export trade, the ISO 9000 family of standards is used to represent a global consensus on good quality management practices. It is made up of guidelines and standards related to maintaining quality management systems and supporting standards.

Environmental Management Systems

A general description for the environmental management system (EMS) is “a system and database which integrates processes and procedures for training of personnel, monitoring, summarizing and reporting of specialized environmental performance to internal and external stakeholders of a firm.” Businesses around the world and their stakeholders are increasingly becoming aware of the importance of environmental protection.

The goal for the EMS is to increase compliance in the act of maintaining minimal legal standards and to reduce waste in other to reduce environmental impact. In other to achieve these goals the environmental management system needs to be subject to a set of criteria with the capability to handle high-frequency data, transparent handling, and processing of data and high-performance indicators.

The standard used to measure the environmental management system is the ISO 14000 family of standards

Food Safety Management Systems

Every exporter in the food industry needs to understand every individual has the right to expect that the food she/he is consuming is safe and will not in any way cause illness or injury. The concerns related to food safety are usually biological, physical, and chemical hazards, which, if present in food, can cause injury or illness to the human being.

Whatever food products an organization produces, it has a responsibility to manage the safety of the products and not leaving out the safety and well-being of their customers. The consumption of unsafe food may come with serious consequences that can’t be reversed.

Food safety management standards like ISO 22000 and HACCP (Hazard Analysis and Critical Control Points) exist to help food organizations to control and identify food safety hazards. Compliance with these standards provides a layer of reassurance within the global food supply chain and putting the right food in front of the consumer and not just any food, but the food they can trust.

These standards ensure that food is safe from harvest to consumption. That is, each step involved in the production process and consumption is subject to hazard analysis and necessary controls. The premise for these standards is simple: if each step of the process is carried out the right way, the end product will be safe.

Other Management Systems

The growing concerns of consumers in developed countries about the working conditions in developing countries has led to the creation of working condition standards. An example can be the SA 8000 standard on social accountability. The main purpose for creating this standard was to put in place a universal code of practice for labor conditions.

This was to ensure that consumers around the world could be confident about the goods they are consuming and not to support organizations using illegal labor conditions to produce their goods.

An estimated 100 million children worldwide are considered to be in full-time labor and the vast majority from Africa, Asia, and South America. With the SA 8000 standards, companies are not allowed to support child labor and working hours must not exceed 48 hours a week and not more than six days.

Other practices other than child labor which the SA 8000 Standards stand against are; forced labor, lack of a healthy and safe environment for work,  lack of freedom of association and right to collective bargaining, discrimination, discipline, excessive working hours without compensation, and lack of management systems.

Conformity Assessment and Certification

The term conformity assessment is used to collectively cover the many elements essential to demonstrate that a product or service meets the required technical and other requirements. The core services of a conformity assessment, in general, are testing, inspection, and certification.

The Conformity assessment is normally performed on processes, products, services, systems, and even on persons. To effectively ensure the validity of conformity assessment measurements, the testing, inspection, and certifications are supported by metrology institutes and calibration laboratories.

The supplier or manufacturer can provide their own conformity assessment services which are known as the first party conformity assessment or better still the supplier’s declaration of conformity. The purchaser on their part can perform their own conformity assessment also known as the second-party assessment. This is somehow an extra cost for some SMEs.

SMEs in developing economies consider conformity assessment services by independent organizations which are also known as a third-party conformity assessment. These third-party conformity assessment bodies must be able to demonstrate their technical competency through international accepted accreditation and their certificates and test reports are recognized in the market you are exporting to.

Certification

Product certification is an attestation from a certificate organization testifying that a batch of products or the continuous production of a product has been inspected and tested by the organization and the products comply with specific requirements and standards.

The product attestation is presented in a form of a certificate and a certification mark of which the manufacturer can affix on the product after being licensed to do so. With the licensing, the certification organization provides assurance about the quality of the product and the standards.

There exist numerous product certification organizations in both public and private domains both international and national levels. In developed economies, private certification organizations are often more important in certain markets whereas in developing economies, the national standards are fully responsible for the product certification with any market relevance.

The majority of the certifications are mostly accepted only in the local or home market of the certification body. Some are recognized regionally or even at the international level. Some examples of product certification marks are the GS (product safety – Germany) the ASME mark (pressure vessels – United States) UL mark (product safety – United States).

Communication Skills

The ability to communicate your offerings is a marketing capability required even when exporting to new markets. As soon as you have put in place a strategy for a specific market and before accepting customer orders, it is important to develop and put in place an adequate marketing strategy that will not only help your organization find and keep the right customers but also enhance your production capabilities.

The Development of the right marketing communication is a capability that can be connected to the strategy and use perfectly for advanced selling. The right marketing communication instruments can be potentially used as part of a promotional mix with the basis on which marketing communication instruments can be used and on which communication media?

Building a Communication Strategy

Before developing the correct marketing communication techniques, the right marketing communication instruments and to make the final decisions on which communication instrument to use and on which platform or media, businesses are required to develop their communication strategy which must be aligned with the overall business strategy and market objectives.

Businesses must understand that trade exists because a group or nation has the potential to supply a commodity, product, or service that is in demand by another country. If such demand exists, then there is a problem to be solved in that market that needs the supplying company’s products or services. To better serve the market, businesses need to communicate and show the customers how they are the right choice for the “job”

To develop a successful communication strategy, you must first of all understand the purpose and the objectives for the communication strategy and what you are seeking to achieve in the market. It could be to achieve the overall mission of the market, to bring out the values of the company, for brand recognition, or to prove the quality of the product of service.

It could also be to create attention to the current clients and attract new clients, to enhance a buyer-seller relationship, or to foster and grow proper understanding between the buyer and the seller, whatever the purpose, it must be in line with the market strategy and to focus on the strategy that will help the business get more success in all aspects of future development of the market.

With a clear purpose and objective, the communication strategy can be easily developed with a greater understanding of which marketing communication techniques to use, tools, and which platforms can best help achieve the desired requirements.

International Marketing Communication

The export operation must be accompanied by a proper marketing communication strategy. The marketing communication needs to be linked with the overall business strategy and needs to be put in place in advance and before selling. Your marketing communication capabilities need to be able to achieve the purpose and objective of the communication strategy put in place.

Marketing communications can be best be achieved with proper market research to understand the market, the best branding and advertising practices, by ensuring your business reputation through an efficient public relation strategy, engage in successful lead generation campaigns,  analyzing and understanding the sales process by implementing effective sales tools, partake in trade shows and implementing strategic digital marketing techniques.

Marketing communication instruments

Businesses are highly required to provide a high adaptation level for an effective international marketing promotion plan. Even though there are numerous factors that may determine the choice of marketing tools companies are required to adapt and fully use the marketing tool mix that will help in achieving the market objectives.

This can be achieved through sales promotion, media channel allocation, event marketing, personal selling, social networks, websites or translated sales pages, b2b market portals, internet marketing, and email marketing or direct mail to convey marketing messages directly to the customers.

Understanding Which Marketing Instrument to Use

After thorough market research and detailed analyses of all the possible instruments, it is important for an export company to decide on which platform, media, or instrument to use for their marketing communication. Again, in deciding on which marketing communication instrument to use businesses must consider their overall purpose and objectives for the market.

If the objective is to reach out to the youths, or if your target market is the youths, which platform works well for the youths in that market? Where do they spend most of their time? How can you best convey your message to your target market to best capture their interest?

In deciding the marketing communication instruments, it is best for the company to consider the factors for an effective marketing campaign, like cost, outreach, and complexity, and to make sure the perceived return is above average.

Product Distribution

Getting the final products to the end-users is a very important challenge that requires a careful strategic plan, and execution. Without an effective distribution channel, your export capabilities can be limited and short lift. The sole production purpose of any good or service is for it to reach the ultimate end users. A “broken link” between the manufacturer and the final consumer will make production useless.

A good distribution channel will not only highlight potential sales channels for your product but will also show you how to exploit these distribution channels. One of the main reasons why businesses export their products is to tap into new opportunities in other to fuel growth and increase profits. Without a firm distribution strategy, it will be difficult to achieve your export goals.

There are numerous distribution alternatives and choosing the right channel which is compatible with your business strategy and success is of prime importance. Selecting the right channels for your export endeavors also requires you to be able to link the channel to your logistics.

A veritable and strategic distribution channel should describe and discuss the flows in the channel, taking time to select the right actors, developing the procedures and systems necessary for managing the distribution channel.

Moreover, the channel management must be linked with managerial activities and also management should be able to describe the marketing implications of the channel management.

The business strategy you use will influence your choice of distribution channel. Businesses may want direct access into the market or work with an agent or export Management Company to handle and take care of your export needs. Businesses can either work with two types of distribution channels. Direct or indirect distribution channels.

Direct Distribution System

A direct distribution channel permits the manufacturer or producer to sell their goods or services directly to the consumers without any intermediaries. With a direct distribution system, the exporter has direct control over the marketing operations and can decide on the proper marketing strategy that will best align with the market objectives.

The exporter will be able to have full market information like the trends, the competition, and product acceptance. The seller can decide the price the product can sell in the market and enjoy the profit margins.

When it comes to the exportation of highly specialized equipment, customer satisfaction is highly required. Such equipment may require warranty and after-sale services in which an intermediary or agent may not have highly qualified staff to render these extra services. In such situations, buyers may find it necessary to deal directly with the manufacturer.

Also, if branding matters to your business, you may want to make sure to stick with a direct market distribution channel. If you are required to use other distribution channels, work closely with a small group of distributors, and keep a tight control. It will also be your business to invest in your distribution channels by means of offering sales training.

Indirect Distribution System

With the indirect distribution channels, the manufacturer gets its products in the market through the help of intermediaries. The intermediaries turn to have full control over the marketing operations and can also decide at which price the products are being sold in the market.

Getting into a new market, especially with known competitive brands already existing in the market, many manufacturers or producers prefer to use a known distributor with full knowledge of the market to gain credibility.

Besides, direct exporting may require extra resources, large funds for financing, the development of an export team, or engaging staff in export requirements which can take time in building experience. And the distribution can cost even more for a new market.

Businesses getting into the export space are quick to realize the benefits of appointing an agent or a distributor in the foreign market and concentrate their efforts on production problems while all the burden of selling in the new market is pushed to the intermediaries.

Packaging and Labeling

The most important stage after a production process of goods is the preparation for shipping which is the process of packaging and labeling the final product for export. Poor packaging and labeling not only makes the products look unappealing but can be costly if the products are wrongfully handled during the export process.

The primary role of packaging is to make the final product look attractive and appealing, and also to protect, contain and preserve a product as well as to help in the handling as the product makes its way from the production chambers.

An effective packaging should be able to;

• Physically protect against shock, vibration, moisture, temperature, and dust.
• Effective packaging can be used for marketing. Attractive and proper packaging can appeal to and encourage potential buyers
• For convenience purposes, a product can be packaged in a way to ease distribution, handling, sale, display, opening, use, and reuse.
• A good packaging can enhance containment or agglomeration. It makes it possible to put small objects in one big package to reduce costs and improve efficiency. For example, one might pack 100 pens in one box rather than in 100 separate boxes.
• For security purposes, a properly secured packaging system can reduce the security risks that may arise with a shipment. Authentication seals can be used to indicate that a package and its contents are not counterfeited goods. Anti-theft devices can also be used such as electronic article surveillance tags, RFID tags, which can be detected at exit points during export and which require special technical tools to deactivate.

Labeling on the other hand should be able to brandish the end product with appealing messages that depicts the standards of the manufacturer and the quality the buyer will get from the product after purchase.

Above all an effective labeling practice must carry the following key information when it comes to exporting;

• The Logo of the shipper
• The country the product is coming from or manufactured
• The net weight of the product
• The number of packages and size of the cases
• Expiry date and shelf life
• Handling indications
• The port of entry
• Cautionary markings for fragile boxes (Arrows for “This Side Up)
• Labels of hazardous materials
• And also the standards the product meets

The labeling can provide further information like how the product can be transported, used, recycle, and disposed of. The government in the importing country may require other markings.

In today’s import and export marketplace, packaging is considered a taught science which permits the use of numerous technologies to guarantee the protection of products from shocks during transit, en route to the final consumer. It is the company’s place to determine the most appropriate packaging and labeling options for their products.

When it comes to enhancing export capabilities using packaging and labeling, exporting companies are obliged to understand the difference between protective packaging and point of sale, the importance of display packaging in effectively exporting goods to new markets, businesses should be aware of the important variables when deciding the appropriate labeling and packaging which can be applicable for their products

In addition, exporting companies should be able to design effective marketing labels for the international market and must be familiar and aware of the international rules and regulations governing the labeling of goods to be exported.  

EndNote

A company’s export capability can determine how successful the company can be in the international market. When a business pays attention and strategically address the issues that may arise when businesses go global, they stand a greater chance of meeting success.

An enhanced export capability requires companies to check on their production capabilities, communication skills, export quality management, distribution channels, and their packaging and labeling. Addressing these prime topics in the right manner can lead a business to success when exporting in a new market.

Coupled with the key determinants in enhancing the export capabilities of companies looking to go global and to achieve a competitive advantage in foreign markets, such businesses must be able to pay close attention to four export variables which include unpredictability, adaptability, innovation, and task-flexibility.

Export businesses with a clear vision, purpose and objectives which can be clearly aligned to the above key factors, shall make a successful venture into the world of exportation.