Disadvantages of Direct Exporting 1

Disadvantages of Direct Exporting
1) High transportation costs due to transportation of bulky products.
2) Firms may face the risks of trade barriers and protectionism.
3) Quite difficult to market because of the marketing distance from customers and marketing may also be time consuming.
Advantages of Strategic Alliances
1) A tool for global competition in a globalized environment.
2) Exchange of technology thus leading to technological innovations and break through
3) Contributes to industry convergence i.e an industry may come together and form an alliance thus converging the industry.
4) There is risk reduction since all the firms share the risk.
5) Firms enjoy economies of scale since they bring together their resources.

Disadvantages of Strategic Alliances
1) There is a threat of a firm acquiring the other especially if the other small firm seams weak.
2) The partner’s competitive position might be eroded.
3) A partner might abandon the other after obtaining the desired goal.
4) A partner might use a strength acquired from the other to retaliate against it.
Advantages of Direct Exporting
1) Better control over distribution channels.
2) Firms enjoy economies of scale since production is concentrated in the home country.
3) There is protection of trademark, patents and goodwill.
4) Firms enjoy greater sales thus greater profits compared to indirect exporting.
5) Just In Time feedback from customers thus developing a good relationship with customers.
Disadvantages of Direct Exporting

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