What are the advantages and disadvantages of direct and indirect exports?
Answers
The following are the advantages of indirect exporting: (a) Less Risk: Indirect exporters are prone to comparatively less risks as the risk of marketing gets transferred to export market intermediaries. At the same time, these intermediaries are specialised in their own field.
Answer:
Advantages of Indirect exporting are:
1) Reduced risk- There are marketing risks which are faced by intermediaries and indirect exporters do not face that.
2) Specialisation - With greater specialisation effect on manufacturing, the indirect intermediaries can rely on the exporters about tackling other technical stuffs.
Disadvantages of indirect exporting are:
1) Getting information that are second hand - Since they are not in direct touch with foreign consumers, the information comes from the marketing intermediaries.
2) Not able to exercise any control - Indirect intermediaries can not take decision about packaging, advertising , pricing sales.
Advantages of Direct export are :
1) Well informed about market situation - Since the exporters are in direct touch, they are well aware of the current market situation and takes decision based on it.
2) Control over the goods and products - They have full power on controlling the products quality and other stuffs.
Disadvantages of Direct exporting are:
1) The risks are greater as they are in direct control of exporting.
2) Too much managerial pressure and assistance.