Image credited to: pixabay
First and foremost, market has to do with making products available for the public to buy at a particular place or environments, either by the producer, supplier, wholesaler or retailer. It could also mean a place, area or building where people meet to buy and sell their products or goods. The most essential point here is that goods or services are made available for people to buy or patronize. Although in commerce, the word market may have a broader sense, such as promote or advertise products, run a business, demand, service e.g. hotel, restaurant, telecommunication, etc., total sale, amongst others. Put differently, in commerce the word ‘market’ may have a wider coverage for it may be described as systems, institutions, processes and procedures, international or diplomatic relations and infrastructures that allow and promote the act of buying and selling between people or countries. The systems here refer to institutions that make international trade easier e.g. World Trade Organization {WTO}, International Trade Association {ITA} etc.
Failure means unsuccessful! Or not achieving what one intended or wanted to achieve.
So, what is market failure?
Market failure simply means when people refuse to buy or patronize particular product and service made available for them. It means people are not willing or ready to buy or patronize a particular product or service rendered. Market failure could also mean inability to access market. There may be various reasons that can be attributed to market failure such as, poor information, high price not justifying the quality of products or services rendered, cultural beliefs, and so on.
What is Exports Business?
An export business, on the other hand, has to do with selling your products and services beyond your country’s borders. In international trade, an export business is the method or way by which different industries or companies and individual business owners from one country sell their products or services to a different foreign country. Simply put, an export business is the sale and movement of goods and services from one country to buyers in other countries. An export business deals with creating sales potential for products and services from the home country to other countries.
So, what is Market Failure in Exports Business?
Market failure in exports business simply means unacceptable products or services in foreign countries. It is when exported goods and services from home country by producer or supplier are rejected in the host or foreign country. Put differently, market failure in export business or global trade can also be described as inability to have access to foreign market, which may largely be due to various reasons, e.g. lack of relevant information, poor production process etc.
Before companies engage in exports business, adequate information about the foreign market is necessary, because each country has its own government, policies, laws, cultures, languages, currency, time zones, inflation rate, taxes, etc., and information on all of these are important to make exports business successful. Unfortunately, some companies do not have adequate information they need to access foreign markets. When management of a company wants to expand its business to foreign markets but is unable to do so, due to lack of information on production process, specification, etc., this is a market failure! Better still, if you are unable to sell your products or services efficiently at a desired location or in a foreign country, this’ a market failure in export business!
Furthermore,, in international market, developing countries suffer more from market failure than the developed countries. The business giants from developed countries often have more access to market in developing countries while companies form developing countries often find it difficult, if not impossible, to have access to market in a developed countries. In addition, the investors or entrepreneurs from developed countries may have less difficulty or less restriction to access markets in developing countries, while entrepreneurs from developing countries may have to pass through difficult process or face stiff restrictions to access markets in developed countries. This also is a market failure for companies and investors from developing countries.
In view of the above, the need for commercial diplomacy to be proactive to provide prompt assistance needed for investors or entrepreneurs at home to have access to markets in host country cannot be over emphasized. Lack of relevant information and government intervention programs to educate and to improve drastically the chances and interests of investors from the home country to participate in exports business must be addressed by commercial diplomacy. Government is expected to provide support programs for home companies or entrepreneurs that will allow them to be viable exporters and to increase their export capacity. Export business is highly profitable, for instance, the United States make approximately two trillion US Dollar every year in exports business. Without any element of doubt, exports business has huge benefits for nation and its citizens which may include, improve in the economy and increase in wealth accumulation for both the nation and the investors, its foreign earnings potential, growth and expansion objectives amongst others are enough reasons for government and commercial diplomacy to be proactive to prevent market failures in export business for the exporters and to support them to become potential exporters and as well to increase their capacity for exports.
Thank you!
