In this article, a method is developed for choosing an
appropriate product-market strategy, given the relative
endowments of the exporter and the possible target
countries. It is argued that in selecting product-markets
for exports, competitive advantage as well as export potential
are important. Furthermore, competitive advantage
should be computed on the basis of marketing and technological
factors in addition to traditional factors. The
method for evaluating product-markets is illustrated by
means of a simulation using hypothetical data. Considerations
in addition to comparative advantage and export
potential such as barriers to entry and social and political
compatibility are also discussed. Guidelines for implementing
the proposed model are provided.
Nikhilesh Dholakia and Rakesh Khurana are assistant
professors in the Marketing area at the Indian Institute
of Management, Ahmedabad.
The development of exports, especially of nontraditional
goods, is a major component of
the economic policies of many Third World
countries, including India. Successful export
programmes have to be based on sound productmarket
strategies. In this article, we develop a
system by which an exporter from an
underdeveloped country, facing a highly competitive
world market, can screen products and
markets.
Before delving into the conceptual basis
and the specific structure of the model the
relationship between export policy and economic
development needs to be understood. While
exports assume a critical transient importance
in an economy starved of foreign exchange, it
is not necessarily true that a growth policy
based heavily on exports will meet the longterm
political and economic objectives of most
Third World countries. As Amin points out :
It is more to the [underdeveloped] country's interest to
develop those branches of production in which the greatest
[internal] progress is possible, and to subject its choices,
where foreign trade is concerned, to the priority requirements
of this kind of development. The trading options
thus decided on will have to be modified at each phase
of development, (p. 46)
Thus, exercises in export strategy at micro
level, such as the one attempted in this article
will contribute to macro goals only when the
export choices are consciously subjected to the
socio-economic requirements of domestic development.
With this caveat, we will now review
the conceptual issues underlying export trade
flows.
 

 

 

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