One of the important decisions of the exporter is to decide upon the kind of organization he will create for direct exporting. These forms of organization are to be established both inside the country and various foreign markets
Forms of direct exporting inside the country:
Built-In export departments
Creation of built-in export department involves less cost. It is also very ample to establish an export department within the organization. The export department is headed by an export manager who is assisted by a few clerks. The export manager procures the order. Then the order is handled by other regular departments. The competence of the export manager is key to the success of the export department.
Self contained export department
While the built-in export department shares its work with other regular departments, the self contained export department is independent of its own. The export department is a self-contained unit having its own staff As it functions independently, there is no conflict with other departments of the company. The export department is located in the port towns in order to utilize the shipping and forwarding facilities that are readily available. Moreover, foreign buyers and buying delegations find it convenient to visit port cities.
Separate export company:
Establishment of a separate export company is an elaborate arrangement made by the exporter inside the country. When the volume of export business is substantial, creation of an export company is inevitable. The following are the advantages available to separate export company.
- The export business can be brought under a unified control.
- The efficiency of export operations can easily be determined by calculating the cost of operations of the export department.
- Concessional export financing facilities are available to the export company.
- The export company can handle a complete line of products by purchasing products from outside sources.
- Expert companies can easily claim various tax coupons available under the Income Tax Act.
Combination export managers:
It may not be possible for small concerns to establish an export department of their own. They can depend upon the services of “combination export managers” for carrying out export operations. Under this method, two or more firms involved in exporting business appoint a combination export manager. He will operate in the capacity of an export manager. Foreign customers directly deal with combination export managers and enter into transactions. A combination export manager works for two or more firms, whose products are allied but on non-competitive lines. He is entitled to set remuneration either on the basis of salary or on the basis of salary cum commission. However, payment of commission strongly motivates the combination export manager to attain higher sales. Appointment of combination export managers ensures the following advantages.
- The cost of processing export order is comparatively less as the overhead expenses involved in export business are spread over several companies.
- As combination export managers are experts in export management, they can render valuable services like financing, legal advice, advertising and sales promotion, provision of credit information, etc.
- The combination export manager can train well the personnel of the company. In due course of time, they can work independently.
- Small manufacturers highly benefit from combination export managers.
Joint marketing groups
Joint marketing groups are formed by exporters of similar or closely related products to cultivate foreign markets. So, forming joint marketing groups involves joint efforts of the manufacturer on permanent or on adhoc basis. The member of the joint marketing groups may perform the following activities.
- They pool their resources and cultivate foreign markets jointly.
- They participate together in overseas trade fairs and share the expenses among themselves.
- A catalog of products manufactured by the group is jointly published in the overseas market.
- The group solves production problems experienced by the members.
- The group advises members on matters regarding quality control and product adaptation.
The success of the joint marketing groups is dependent upon the following points:
- The members of the group must be cooperative in all their activities undertaken by them jointly.
- They must keep going until the desired results are achieved.
- All members should extend continued moral and material support in carrying out operations.
- They must abide by the terms and conditions of association.
- Efficient production and quality control should be ensured.