International
market development is a costly exercise. Apart from the infrastructure costs
of setting up an export department, companies need to invest in appropriate market
research, suitable promotional material, product and or trademark registration,
increased production costs and means, etc. Certain products may need to be modified
to meet the requirements of a particular market, and labelling and/or packaging
may need to be adapted to conform to foreign government, regulations or foreign
buyer preferences. In addition the pipeline between expenditure on raw materials,
production, marketing and distribution, and the receipt of proceeds is much longer
for international sales than for the domestic sales, financing of the operation
may be required for much longer periods of time.
Companies therefore need to have a sound financial base to be able to cope with
the additional demands on resources that comes with exporting.
