Exporting and Growth for Small Business

Exporting and Growth for Small Business

Summary of the Facts

This case proficiently reflects the importance of export for small businesses, in this contemporary world. The main theme of this case revolves around the importance of export. Morgan Motors, Wadia & Maiden mills story is reflected in this case analysis.

Morgan motors as the name suggests is an icon of small businesses, which primarily deals in classic sports car. The company has established over 100 years ago, who produce approximately 700 cars in annually through the support of 150 employees. Interestingly 70% of the sales of the company come from export. This fact dictates that out of every 100 cars, only thirty cars are sold in original market. This ratio of signifies the importance of export for small business.

Wadia manufactures are dealing in high-end disc players, for audiophiles. The company generates $ 8 million of annual sales, out of which 70-80 % come from overseas sales. Wadia has targeted Asiatic region, which constitutes 30-35% sales of the company. China & Japan, accounts for approximately 15% of the total sales of Wadia which signifies the importance of export.

Maiden Mill is a United State based high tech textile company, which generates $50 million sales in a year. The company does not face much growth opportunity in United States. This leads the company to grant financial and advisory facilitation, in order to enter the global market. All the three companies, clearly signifies the importance of export with respect to survival.

Statement of the Problem

While going through the case, I have identified a similar problem for all the mentioned small business companies. Morgan motors and Wadia manufactures does not have growth opportunity in the local market. Their major revenue chunk comes from the overseas market. These companies are entirely dependent on export, which is considered as the biggest issue in this case.

Causes of the Problem

I have identified, that local growth and opportunity is the biggest issue in this case. The drowsy growth of local market has forced the company to approach overseas market, in order for their survival. There are various constraints which a company face, while going outside the local boundary. The major constraint of export includes lack of government support, fluctuation of International currency, foreign market rivalries, payment risk and recovery.

If, the government does not support the local firm in terms of legal and financial issues export cannot take place. When the local company, exports the good to foreign country exchange take place in dollars. The fluctuation in currency effects the operation of the local business. The most important constraint which I have found is of rivalries. If, the foreign company government starts giving subsidiary products to the local market then the exporting company will not survive in the foreign market. Another important constraint in export is of payment and recovery risk. Any case of fraud in foreign market, leads to difficulty in payment collection. The perceived risk incline when compared with actual risk, with respect to ...