In the age of globalization, exporting represents a crucial component to the long-term economic health of the United States and to Oklahoma. As the world gets smaller, markets for products and services continue to expand, representing a variety of opportunities for Oklahoma businesses and communities to increase profits, raise employment levels, fund sustainable economic development initiatives, and attract foreign direct investment (FDI) dollars.

Yet according to the U.S. Small Business Administration's Office of International Trade and the U.S. Department of Commerce, only a small percentage of potential exporters take advantage of these opportunities. As the division between domestic and international markets continues to blur, Oklahoma's businesses--no matter their size--must think globally.

However, making the export decision requires careful assessment of the advantages and disadvantages of expanding into new markets.

Advantages include:

• Enhance domestic competitiveness
• Increase sales and profits
• Gain global market share
• Reduce dependence on existing markets
• Exploit corporate technology and know-how
• Extend the sales potential of existing products
• Stabilize seasonal market fluctuations
• Enhance potential for corporate expansion
• Sell excess production capacity
• Gain information about foreign competition

Disadvantages -- Your business may be required to:

• Develop new promotional materials
• Subordinate short-term profits to long-term gains
• Incur added administrative costs
• Allocate personnel and resources for travel
• Wait longer for payments
• Modify your product or packaging
• Apply for additional financing
• Obtain special export licenses
  
  Although there aren't any hard and fast rules for when a company should venture into the global market, success ultimately depends on management commitment and careful and extensive planning.

Management: A Clear, Committed Export Vision
A successful exporting strategy requires commitment from a company's managers--from the Chief Executive Officer to front-line supervisor.

Management Objectives

• What are the company's reasons for pursuing export markets? Are they solid objectives (increasing sales volume or developing a broader, more stable customer base) or are they frivolous (the owner wants an excuse to travel)?
• How committed is top management to an export effort? Is exporting viewed as a quick fix for a slump in domestic sales? Will the company neglect its export customers if domestic sales pick up?
• What are management's expectations for the export effort? How quickly does management expect export operations to become self-sustaining? What level of return on investment is expected from the export program?

Experience

• Which countries have inquired about your products and services or which countries have you already done business with?
• Which product lines are mentioned most often?
• Are any domestic customers buying the product for sale or shipment overseas? If so, which countries?
• Is the trend of sales and inquiries up or down?
• Who are the main domestic and foreign competitors?
• What general and specific lessons have been learned from past export attempts or experiences?

Management and Personnel

• What in-house international expertise does the firm have (international sales experience, language capabilities, etc.)?
• Who will be responsible for the export department's organization and staff?
• How much senior management time should and can be allocated?
• What organizational structure is required to ensure that export sales are adequately serviced?
• Who will follow through after the planning is done?

Production Capacity

• How is the present capacity being used?
• Will filling export orders hurt domestic sales?
• What will be the cost of additional production?
• Are there fluctuations in the annual work load? When? Why?
• What minimum order quantity is required?
• What would be required to design and package products specifically for export?

Financial Capacity

• What amount of capital can be committed to export production and marketing?
• What level of export department operating costs can be supported?
• How are the initial expenses of export efforts to be allocated?
• What other new development plans are in the works that may compete with export plans?
• By what date must an export effort pay for itself?

Success Doesn't Just Happen: Developing an International Business Plan
Companies reporting high returns from their export sales have one thing in common--they developed a well-researched and detailed international business plan before venturing into the global marketplace. An essential tool for properly evaluating all the factors that affect your ability to go international, an export strategy should define your company's:

• Commitment to international trade
• Export pricing strategy
• Reason for exporting
• Potential export markets and customers
• Methods of foreign market entry
• Exporting costs and projected revenues
• Export financing alternatives
• Legal requirements
• Transportation method
• Overseas partnership and foreign investment capabilities

Besides being an important document for defining your company's present status and internal goals and commitment, an international business plan is also required to secure export financing assistance. Preparing the plan in advance of making export loan requests saves time and money. Also, completing and analyzing an international business plan helps businesses anticipate future goals, assemble facts, identify constraints, and create goals and objectives.

If based on good information and proper assessment, an international business plan increases the chances that your company will choose the best export options, use resources effectively, and achieve high returns and create jobs. The following sample plan comes from Scottish Enterprise--Scotland's business development agency--and represents one of the plan templates used by Commerce when assisting businesses considering international trade.

I. Executive Summary

II. Introduction
     A. Purpose of the plan

     B. International business readiness factors -

Short term and long term goals for international trade.

Statements of why company is ready to internationalize (i.e., management commitment, financial and personnel resources, etc.)

•  
  • Product description and function

   Statements of why product is ready to export (i.e., domestic product success, and targets a need)
    * Brief description of the industry structure, competition, and demand


III. Market Research
     A. Product classification
     B. Basic customer profile
     C. Target industry (identify and evaluate)
     D. Target country (identify and evaluate) -

Primary
Secondary

Special challenges of country (i.e., culture, climate, resources, etc...)

Product modifications needed

     E. Target market (identify and evaluate) - 
          o Primary
          o Secondary
          o Special challenges of market (i.e., culture, import controls, etc...)
          o Product modifications needed
          o Competition and demand (identify and evaluate)

IV. International Business Strategy
     A. Entry into market
     B. Trade leads
     C. Overseas representation
          o Managing distributors
          o Motivating distributors
     D. Promoting the product
     E. Servicing products and warranties

V. Sales and Delivery
     A. Product pricing
     B. Method of Payment
          o Terms
          o Conditions

     C. Product delivery
          o Shipping
          o Storing

     D. Forecast of sales within first year

VI. Trade Rules and Regulations
     A. Rules and regulations that affect product per country and    market (export licenses, tariff laws, etc)

VII. Financing
     A. Available financing resources
     B. Methods

VIII. Plan Implementation Schedule
     A. Time frame for implementing elements of plan
     B. Time frame for evaluating implementation

Appendix
     A. Background information on company
     B. Background information on target countries
     C. Background information on target markets