These advisers can spot opportunities for exporting particular products, know the capabilities and weaknesses of the enterprises, and can facilitate the negotiations involved in getting the groups started.
For all their advantages, joint groups are not a cure-all for export problems. In fact, a significant number of them have failed. Here are some of the aspects that the Enterprises’ agencies should be concerned with, when organising or joining exporting groups.
A main problem is the enterprises’ need for financial assistance. This is one of the biggest obstacles faced by the enterprises in joint export marketing groups. Governments have been able to help in the following three ways:
i. Making direct grants to groups and providing sufficient working capital.
ii. Giving financial assistance as an export incentive.
iii. Covering the cost of special group facilities.
Enterprises agencies provide funds and advise to the export consortia on various aspects of fixed investments, working capital, publicity budgets, special projects, development funds, share capital, member’s contributions, commissions and mark-ups.
The enterprises’ agencies also mediate during disputes between members of joint export marketing groups. Unless there is a mechanism for settling such disputes impartially, it could affect the effectiveness of a group that should be contributing to the growth of the national economy.
Another potential problem is that, prospective members may fear the loss of their identity in the consortium. This can be resolved if the member can be satisfied that, membership will enable it to earn export profits but will not result in a loss of identity in the home market.
Prospective members may fear that joining a group will mean disclosing confidential information about their own activities. Enterprises’ agencies can help to remove such suspicions by the manner in which they guide the negotiations.
Prospective members may be reluctant to cooperate with their competitors, or fear that they may be swamped by bigger firms. They may also have misgivings about future changes in membership, shortages of management and marketing expertise, and about technical developments, product design and adaptation, licensing agreements and transportation arrangements.