International Marketing Practices

section outlines major considerations for firms with exporting aspirations. For additional resources on organizations assisting exporters, see Appendix B.

Firms must strategically consider the long-term profit potential when determining the ideal foreign market in which to operate. Similar to domestic marketing, a company needs to conduct careful research of foreign markets to find unfulfilled needs to capitalize on through market entry. It may prove effective to enter a market that has little-to-no domestic competition [21]. For example, a company based in the U.S. Pacific Northwest exports structural wood components to South America. These large, cross-section elements have been reclaimed from old and decommissioned timber frame buildings and will be used for high-end homes, which owners value for both their structural integrity and historical significance. These concepts are explained in detail later in this guide. The timing chosen to enter a foreign market is also important, particularly when considering whether to enter before or after the competition, as there are advantages to both. Entering a market before the competition and reaping first- mover advantages can help to maintain control and effectively influence pricing. However, if a company were to enter a market later, they could observe other firms and learn from their mistakes and successes [21]. Scale of entry is critical when considering entry strategy, especially for a small to medium sized forest products producer. Large-scale market entry requires sizable resources, such as acquiring or investing in an overseas company. For small companies, these resources are not usually available. Thus, a staged, small-scale entry would likely need to be implemented while gaining further knowledge on the workings of the overseas market. Decision on mode of entry into a foreign market is essential at the early stages of planning an international operation. Forms of entry include, but are not limited to, exporting, turnkey projects, licensing, franchising, establishing joint ventures, or setting up a wholly owned subsidiary [21]. For the purpose of this guide, exporting is assumed to be the form of entry, as it is the most common method for U.S. small to medium sized forest products companies. Exports account for about 10% of the total global economic activity [19]. Exporting activity can be direct or indirect , and a company should consider which option will serve its needs most effectively. In direct exporting, commerce occurs directly with a customer overseas, and the manufacturer is responsible for handling, shipping, and collecting payment. A direct exporting approach requires more resources and commitment; however, it allows for more control on the operation, a closer relationship with the customers, and potentially higher profits because there is no middle person. Companies that engage in indirect exporting sell through a middle person, also known as a trade intermediary [19]. This strategy has lower risk and requires less involvement because many forest products companies, big and small, sell overseas through intermediaries.

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