The Internal and External Barriers to Exporting Faced by SMEs

Essay by andy3yUniversity, Bachelor'sB, March 2008

download word file, 6 pages 5.0

The Internal and External Barriers to Exporting Faced by SMEs After many countries enter into World Trade Organization in the world, the multitudinous small and medium-sized enterprise will obtain the import and export operating right. This means they will have the bigger development space. But the small and medium-sized enterprises face some risks when they are doing their business. They reason could cause this problem is that small and medium-sized enterprises have some insufficiencies by themselves, especially on exporting aspect. (Pierre-Andre J, Andre j, and Laurent D, 1994). Generally speaking, exporting barriers could be differentiated as internal barriers and external barriers. Internal barriers related to organization management, information etc. External barriers deal with the host and home environment and government policy within which the company operates (Leonidou,1995a). Therefore, this essay will focus on SMEs exporting and expounds the internal and external barriers to exporting faced by SMEs.

For Internal barriers, the informational barriers are the most important factor.

'Informational barriers refer to problems in identifying, selecting, and contacting international markets due to information inefficiencies.' (Morgan and Katsikeas 1997). The unenlightened information is one of the informational barriers. The international trade relate to different countries' laws and conventions. Obviously, exporting is a complex process that needs to pass through many links, such as commodity inspection, customs, insurance, transportation and so on. Therefore, international trade is much more complicated than the domestic trade; the risk is also higher. Usually, the partial small and medium-sized enterprises are insufficiently experienced and lack the talented person when export their product. They often consider some factors, but actually neglect other factors. For example, they think much of signing contract, but lack the ability to fix the problems after contract and fulfill the contract. The only reason is that they don not have fully understanding of...