Question

1. Why is exporting a good way to initially enter a foreign market?

Answer 1

Ans- Exporting is a good way to initially enter a foreign market because when we do exports we do not have to worry about any other things which generally happens when we set up our facility in a foreign country, we just need to export the products by doing the formalities which are required like paying the customs duty and all while exporting the goods. We are less experienced when we try to enter the foreign market for the first time as we do not have much knowledge about the market in other country and so if we select some other entry mode it may be risky for us and we may end up being in huge loss and therefore entering initially the foreign market by doing exports will be the best thing as it is less risky and also while exporting goods we can learn about that specific market by producing goods in our home country without physically being there and we can plan our things gradually. It can be said as we can see how much demand our products have in foreign countries through the exporting mode without being in loss as we are just distributing our goods there and if there is no demand or less demand for our products than we can eventually stop exporting our products without being in much loss which otherwise entering through other modes we have to suffer huge losses if we did not study the market properly and had set up our facility over there and if our products have heavy demand in foreign markets than we can earn huge profits with very less investment in the export mode and also it strengthens our relationship with the foreign countries. So exporting is the best mode of entry in foreign markets initially.