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Disadvantages of Exporting
The main disadvantages of exporting are:
- Financial management effort: To minimize the risk of exchange rate, fluctuation and transactions processes of export activity the financial management needs more capacity to cope the major effort
- Customer demand: International customers demand more services from their vendor like installation and startup of equipment, maintenance or more delivery services
- Communication technologies improvement: The improvement of communication technologies in recent years enable the customer to interact with more suppliers while receiving more information and cheaper communications cost at the same time like 20 years ago. This leads to more transparency. The vendor is in duty to follow the real-time demand and to submit all transaction details
- Management mistakes: The management might tap in some of the organizational pitfalls, like poor selection of oversea agents or distributors or chaotic global organization.
- Greater initial outlay. The cost of doing a direct export business is very high.
- Larger risks.
- Difficulty in the maintenance of stocks.
- Higher distribution costs.
- Greater managerial ability.
- Too much dependence on distributors.
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Unless you’re careful, you can lose focus on your home markets and existing customers.
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Your administration costs may rise as you may have to deal with export regulations when trading outside the European Union.
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You will be managing more remote relationships, sometimes thousands of miles away.
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In overseas markets, you may lose some of the control that you are used to at home.
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You will need to think of your new market differently to the home market. They will be different customers with their own reasons for buying your products.
