“It is one thing to get involved in the export market, but it is another issue to know how prepared a company is to face the challenges of these markets,” observe NPI senior productivity advisers Thabo Sibeko and Heidi Grimbly.
The tool was developed as a team effort from financial productivity advisers at the institute.
Launching the tool at a breakfast meeting in Midrand, Sibeko said this computer-based scientific tool uses five key factors to measure the readiness of firms to enter foreign markets successfully.
The selection and isolation of the key success factors was based on an examination of international trends and experiences and was further informed by NPI’s previous work in helping local firms develop export marketing strategies in the past six to eight years.
These factors include financial resour-ces, marketing capacity, production capa-city, human resources and the product.
Giving the details of the main focus in the analysis, Sibeko said it is important for a company to have a solid financial position before embarking on an export venture.
A good knowledge of the market is also critical as it will determine viability.
This includes the knowledge of key competitors locally and internationally, while a strong local market share is a key indicator in this aspect.
Sibeko further explained that a company wishing to export should have an efficient production capacity, which includes research and development, high-quality products, access to raw materials and up-to-date technology, and should be able to meet the required volumes.
A good human resources base is equally important to a company as it will determine the quality of products.
“If a company has a highly-skilled workforce, it is likely to produce high-quality goods, therefore it is important to invest in skills development,” advised Sibeko.
Unique products stand a better chance in export markets, hence it is imperative that companies conduct research on their products, as well as the markets, he added.
The software is targeting service providers, small, and medium-sized enterprises, and large companies exporting and those wishing to venture into the export market.
Based on the final score, the report identifies key areas of weakness and strength and offers recommendations on what needs to be improved.
The tool, which is administered by a trained adviser, helps reduce risks and at the same prepares these companies for the challenges posed by entering foreign markets.
“We realised the need for companies to know the key requirements in the export market,” said Grimbly, noting that some companies, particularly small, medium and micro enterprises, are usually not ready for the export market.
This is evidenced from the delayed deliveries and returns of goods, which tarnishes the country of origin of the goods, he said.
Another key issue discussed at the meeting is the fact that many companies are focusing on exporting to the developed world, as opposed to Africa, particularly neighbouring countries.
It was suggested that companies should take advantage of existing trade agreements in the continent.