Determining Your Place in the Food Chain: Import, Export, or Both?

By John J. Capela

You know you’re ready for international trade, but do you know whether you want to import or export? The answer that’s right for you depends, in large part, on why you want to go global in the first place.

Importing makes sense when

  • The value of the U.S. dollar is strong — the stronger the dollar, the cheaper purchasing goods overseas is.

  • You’re faced with increased competition, and the only way to remain competitive is to source goods at lower costs for suppliers overseas.

  • You want to identify new products or expand your existing product line.

  • You can’t access products or technologies from domestic suppliers.

  • Another country can produce a product more efficiently because of available resources.

  • You’re a good negotiator and enjoy selling.

Exporting makes sense when

  • The value of the dollar is weak — the weaker the dollar, the cheaper your U.S.-manufactured products are.

  • You want to increase sales and profits. Rising income levels in many developing countries are creating opportunities for more people to purchase goods.

  • You want to serve a market that has nonexistent or limited production facilities.

  • Before your business invests in a production facility overseas, you want to test whether the foreign market accepts your product.

  • You want to use your excess production capacity to lower per-unit fixed costs.

  • You want to extend your product’s life cycle by exporting to markets that are currently not being served.

  • You enjoy selling and dealing with people from other countries and cultures.

Being both an importer and an exporter makes sense when

  • Countries have negotiated preferential trading arrangements.

  • You want to remain price-competitive at home. Many businesses import labor-intensive components produced in foreign countries or export components for assembly in countries where labor is less expensive and then import the finished product.

  • You enjoy buying and selling, dealing with people from different cultures, and traveling.

  • You’re comfortable dealing with the numerous uncontrollable environmental forces involved in importing and exporting.