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On the other hand there are many disadvantages to moving into foreign markets as well. One disadvantage is in regards to extra costs. Because it takes more time to develop extra markets, and the pay back periods are longer, the up-front costs for developing new promotional materials, allocating personnel to travel and other administrative costs associated to market the product can strain the meager financial resources of small size companies. Another disadvantage is product modification. When exporting, companies often need to modify their products in order to meet foreign country safety and security codes along with other import limitations. At a minimum, alteration is often necessary in order to satisfy the importing country's labeling or packaging necessities. A third disadvantage is that of financial risk. Collection of payments using techniques like open-account, prepayment, consignment, documentary collection and letter of credit are time-consuming and more complex (Advantages and Challenges of Exporting, 2010).
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They often find that the costs that are involved are just more than they can take on at the current time. They may also find that their particular product is only suitable for the markets that they are currently located in and would not be successful in other markets. Business that have a product that is already successful in its current markets and is one that can be easily adapted to a foreign market will tend to be the most successful types of business in foreign markets.
References
Advantages and Challenges of Exporting. (2010). Retrieved July 24, 2010, from The Global
Expert Base Web site: http://www.globalexpertbase.com/wp-584-238.html
International Marketing. (2010). Retrieved July 24, 2010, from Reference for Business Web site:
http://www.referenceforbusiness.com/small/Inc.-Mail/International-Marketing.html
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