Export performance stands as a pivotal metric for enterprises gauging their global capabilities. Despite extensive research across diverse industries and countries, establishing a concise Key Performance Indicator (KPI) system for exporting companies remains a complex endeavor. In a recent discussion with the management of a French export promotion organization, it was revealed that a significant portion (up to 90%) of French SMEs opt for an opportunistic approach over a strategic one. This implies decisions based solely on immediate opportunities, such as contacts in a specific country.
Picture having a fixed budget of 20,000 euros exclusively for your export endeavors. The challenge now is turning this sum into a stellar return on investment (Export ROI). What is your best solution to boost your export performance?!
Consider the art of allocation: should the entire budget go into a major trade show, with some allocated to a smaller one, and the rest invested in a local consultant for a targeted market?
Alternatively, is it wiser to use funds for market research to identify the most profitable market or country for your product?
In an era where global markets are increasingly saturated and failure costs rise, the need for a robust KPI system becomes paramount. The challenge lies in the absence of a universal system applicable to all companies, markets, and industries. The prevailing theory underscores the necessity for firms to adapt to external environmental pressures to thrive globally. A superior export performance results from a successful strategic response to external factors, which can be further categorized into industry-specific and market-specific determinants, often challenging to control due to external environmental influences.
The success of export performance is deemed as the accomplishment of both economic and non-economic targets on the international stage at a specific point in time. Objectives vary significantly among enterprises, influenced by factors such as markets, industries, products, cultures, etc. While some companies prioritize short-term financial measures like revenue growth or gross profit, the long-term prosperity in specific markets is often influenced by qualitative measures.
The complexity of export performance evaluation is evident in the multitude of variables identified by an export performance researcher. These variables fall into internal and external categories, encompassing management characteristics, organizational capabilities, knowledge-based factors, relationship factors, and firm characteristics.
In the next post, we will delve into the list of variables that influence export performance, exploring internal and external factors that contribute to a comprehensive understanding of this intricate landscape.
