- by admin
- Posted in Internationalization
- March 23, 2015
- 2093 views
The global financial and economic crisis has made clear to many Swiss SMEs that the risk has increased in the exporting business. Currency losses reduce margins in sales to foreign customers. Economic downturns weaken revenues in foreign markets. Unrest and strikes impede the distribution of products. Foreign competitors copy proprietary technologies. Floods and storms delay transportation.
These are typical examples of risks faced by Swiss companies in the exporting business. The question is how to handle such risks in order to keep them in check and not threaten the company. A study supported by the Commission for Technology and Innovation (CTI) has investigated this question. It probed the ways in which internationally experienced Swiss SMEs handle export risks. The insights gleaned from this study are summarised in these guidelines.
They show that five steps are involved in the process of export risk management. The first step is to determine the export business ventures that are critical for the company. In the second step, these are analysed with regard to the gains and losses that can be expected. The third step is to plot them in a risk matrix which reveals to what extent the company is exposed to risk through export business taken as a whole. The fourth step is to take action to hedge against these critical risks. The fifth is monitoring these and adapting management action if the risk potentials for the company change.
A key feature of internationally experienced companies is that they address a broad range of risk types in their export decision-making. They carefully compare and contrast the opportunities and risks of the export business ventures and base their decisions on up-to-date information. They institutionalise risk management in the company and familiarise their staff with risk potential handling techniques.
These guidelines provide a detailed insight into the ways in which internationally experienced companies deal with export risks and act as a tool for SMEs to use for their risk management. Major support for these guidelines was given by the following business partners: Extramet AG, Contrinex AG, Rieter Machine Works Ltd, Switzerland Global Enterprise and PostFinance. We are grateful for the commitment and expertise which they contributed to the project.
The next crisis is definitely on its way. The important thing is to be ready for it in time.