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Does my company have export potential?

The first step in any SME “export plan” should be to evaluate the export potential of the company. In this regard, businessmen must analyze the company’s innovation and technological standing and the characteristics of the products. They must also consider the company’s trading and financial capacity as well as the available human resources. 

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What is the first step for an SME wishing to export? According to the Inter-American Investment Corporation (IIC), companies deciding to export must follow a series of steps within what is called an “export plan”, i.e., “an instrument to align the company’s resources with the objective of selling in the outside market.” 

According to IIC, the first phase consists of analyzing the export potential of the company, i.e., study the elements available and determine whether they are suitable for expanding business towards other markets. The document divides this analysis in six areas to be evaluated.  

1. Technical and technological standing of the company

In the first place, businessmen should consider how well equipped the company is in terms of technology. Does the company have adequate machinery and equipment for the products it manufactures and trades? Where does a product stand from a technological and innovation standpoint? Is the company able to respond to high demand? Can the company sell the products with the required packaging? Can it respond to short delivery terms? What level of installed productive capacity does the company currently use and what are the medium term perspectives?   

2. Quality, innovation, research and development

In second place, an SME must consider its innovation capacity in the market. Does the product/service meet the requirements and approvals needed to compete in outside markets? Does the product/service incorporate elements or does it have innovating features with respect to the competition (domestic or foreign) that will help the company improve its competitive standing? What actions does the company usually carry out as to innovation, research and development of new products to give the company a competitive advantage not only in the domestic market but also in outside markets? What elements, equipment, and machinery must it change, incorporate or improve to meet the quality requirements of the foreign customers? What are the terms and costs implied in the changes necessary to adapt the company to the requirements of the new outside markets? 

3. Product analysis

In third place, businessmen must study the product in detail. Does it adapt to customer and authority requirements? Can it adapt to the rules, habits and customs of the target market?  

4. Commercial and marketing standing  

In fourth place, exporters should consider commercial issues. Are the company’s prices competitive with respect to those of the competition? Does the company have the minimum elements necessary to present itself publicly? For example, does it have well-presented and designed catalogues in English clearly reflecting what is to be sold? Does it have an appropriate website? Does the company know its strengths or competitive advantages to differentiate itself from the competition? Does it have minimum staff available with adequate training to work in outside markets? Does it have agents or distributors in the country? Does it know the labeling and branding requirements in the target market? Are trademarks and logos registered nationally? Is the competition already selling in outside markets? What results has it obtained in the process? What have they done right or wrong?  

5. Economic and financial position 

In fifth place, businessmen must analyze the financial situation. Does the company have or will it have the minimum resources necessary to go international? Is its competitive standing normal with respect to that of the competition? Does the company have resources or access to financing? How has the invoicing and the income statement evolved in the past three years? How has the working capital evolved in the past three years? 

6. Required and available human resources

Finally, the businessman must consider its human resources. Does the company have the adequate staff to begin an internationalization process? Is specific technical training required?  Does the company have means to carry out a training plan if necessary? Does it need to deploy staff to new markets to sell the product or service? Has this extra cost for the company been taken into account? 

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The IIC developed this summary on the basis of works and presentations commissioned by the IIC and prepared by the following persons and institutions:

  • Roberto A. Cordón Engel, IDOM Consulting
  • Juan Tafurt, IDOM Consulting
  • Juan Francisco Mejía, Ikei
  • Jose Muro, Javaland
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