- The first and the primary reason for export are to earn foreign exchange.
- Secondly, companies that export their goods are believed to be more reliable than their counterpart domestic companies assuming that exporting company has survived the test in meeting international standards.
- Thirdly, free exchange of ideas and cultural knowledge opens up immense business and trade opportunities for a company.
- Fourthly, as one starts visiting customers to sell one’s goods, he has an opportunity to start exploring for newer customers, state-of-the-art machines and vendors in foreign lands.
- Fifthly, by exporting goods, an exporter also becomes safe from offset lack of demand for seasonal products.
- Lastly, international trade keeps an exporter more competitive and less vulnerable to the market as the exporter may have a business boom in one area while simultaneously witnessing a bust in a different area.
Planning for Export
The organization should plan well before exporting as to what product to be exported, where to be exported etc. The organization should also evaluate the export potential of a company. The main objective of a typical export plan should be to identify:
The objectives of exporting
· Lists of activities to undertake to achieve those objectives
· Mechanism for review and
· Activities to help focus on goals·
Institutions involved in export promotion efforts can be put into six different categories.
Ministry of Commerce is included at the top level. It is the main organization involved in the formulation of and guidance for India’s trade policy.
Second level institutions include advisory bodies which ensure that they deal with the export problems with the help of mutual discussions between the government and the industry in a very comprehensive manner.
The third level institutions include commodity specific organizations dealing with the problems related to individual commodities and different groups of commodities.
Institutions at the fourth level belong to the category of service institutions which help and provide full support to exporters to expand their business operations and also expand their effective reach to the world markets.
Government trading organizations especially set up to handle export-import of identified commodities get incorporated into the fifth tier.
They supplement the efforts of various private enterprises in the field of export promotion and import management. Sixth tier institutions cover agencies of export promotion at the state level.