Export is the most common instrument utilised by the companies that want to maintain both their management headquarters in Italy and promote the expansion of their business abroad.
There are many means through which implementing the export business abroad; these include strategic activities that characterise the development of the local business but also require the synergy of hitherto unknown and unnecessary subjects for a local market, such as foreign agencies and distribution agreements with local representatives. These subjects hold corporate positions, therefore the decision will be in the hands of the entrepreneur whether to internalise these figures or not. They have the task of promoting and selling the product, in return for payment of a percentage of the sales and, at times, a sum (variable) by way of an expense account for marketing and advertising activities (for example, to attend fairs or events, for the creation of brochures or other advertising material).
Pros
Export to foreign markets allows a gradual incursion of business into the international market. The slow approach gives the opportunity to the entrepreneur (or who on his behalf carries out the analyses) to have a clear vision of the reaction of the foreign market towards the products/services along with the entry barriers in the various international markets.
Furthermore, using a local representative can consistently break down barriers in terms of networks. It will be up to the foreign collaborators to inform you about the best consultants and lawyers for the establishment and maintenance of a company abroad, in addition to the leasing costs of offices and warehouses. Having a clear idea of the legislation in force in the State will also be important, as well as knowing the required licenses for the export of the product.
This means that starting an export activity requires a preliminary due diligence.
A serious analysis and research are, therefore, necessary in order to assess the reliability of the distributor as well as, of course, the regulatory framework applicable in the foreign state, the respect of which cannot be entrusted without responsibility to the distributor or local agent.
Cons
This business model can result in a loss of control over your product.
The export abroad through local agents and distributors will make it difficult to control the marketing of the product, its diffusion on the reference market and even the use of the related brand.
Without proper control of the distributor’s business, there is a risk that the brand may be placed on an improper market, which is therefore not in line with the target customers chosen at the strategic planning stage. So it would be good not to leave these choices at the discretion of the local representative but to direct it in order to make choices in line with the business strategy.
Be careful, because in many markets the original destination gives an imprinting for the product which is essential: for example, once appeared on the windows of Marks & Spencer in London the product will hardly find a place at Harrods or Selfridges.
In addition, as a general rule, the use of local distributors will not allow you to get in direct contact with end customers, as the agent or distributor may never reveal their contacts, having a reasonable interest in keeping them confidential, aware that with the success of the product on the market the company will try to acquire a direct presence on it.
For these reasons, It is recommended to try to be as involved as possible in the promotional and sales strategy of the product, in addition to the relationship with customers so as to ensure a continuity of business relationships in place, even when they break relationships with the main distributor.