Methodology to evaluate the export potential of a company

The evaluation of the export potential of companies today is very important because it allows them to know their strengths and weaknesses, which will allow them to be more competitive and avoid making mistakes that any company with little experience in exporting can make. The general objective of this work is to propose a methodological design that allows evaluating the export potential of a company based on the selection of those products that can be exported, within a line of the company's product portfolio.

The proposed methodological design was developed with an approach focused on the role of exports for local development processes, it has been adapted to the current conditions of the national economic model and therefore, it is capable of being applied in any Cuban business organization. To achieve its objective, a combination of methods and techniques is proposed such as: analysis and synthesis, historical-logical, from the general to the particular, validation by the expert committee, the Kassavana-Smith Matrix and the SWOT Matrix of crossed impacts, which will finally allow Obtain the products that can and should be included in the entity's export portfolio as well as how to enter the market for these, in the medium and short term, to improve the financial situation of the entity and the locality.

Introduction

During the historical evolution, international trade has had an increasingly growing participation in world economic activity as a result of many economies or countries participating in it, this clearly causes an increase in the commercial flow of the same in which it intervenes, Among other factors, the growing development of technology, but fundamentally due to exports, since at a macroeconomic level, exports, whether of goods or services, are positive for the trade balance, current account and balance of payments of any country, In addition, they constitute a source of demand for the domestic production of goods and even multiply the product and income of the economy in general and of the participating economic agents in particular.

Producing for export is essential for any organization and country, so that Cuba is clearly not alien to this reality and for our country it is of great importance to guarantee its development, especially in current times where the globalization of the economy and markets they have increased business competitiveness and the complexity of the environment, therefore stimulating them is required to achieve competitiveness in the world market.

Cuba as a developing country; It has to channel efforts to be able to insert itself into the world economy, but to achieve this, it must change its condition, from being a consumer of development to a producer of development, which has to be a result of structural changes, then it must make an effort in local development, which in the short term must create the conditions to achieve the long-term objective, a development from below where the fundamental role must be played by local actors through entrepreneurship and their ability to do and think to manage the right decision-making and coherent, that allow to transform the territory, achieving an improvement in the living conditions and generation of employment of the local population,tracing in this way Local Development Strategies and Projects to respond to needs-interests-ends and thus achieve prosperous and sustainable socialism.

Development

Next, the design of the proposed methodology to evaluate the export potential of a company, producer of goods or services, is exposed (See annex 2). This is a methodology developed by the author of this thesis from documentary analysis of the consulted materials, through the conjunction of techniques that are traditionally used in isolation and for purposes other than those pursued in this research, but that in some These measures serve as support for decision-making at the business level and, when used correctly, offer a significant level of information.

Stage I: Analysis of the international market of the products sold by the company

Said analysis will be carried out through a compilation of information from the company itself about the income and quantities sold in a selected period. An analysis of the trend of income from marketing in national markets should be carried out and, if these meet national demand, take advantage of these productions and analyze their possible export in international markets that demand the product.

In the same way, these results should be contrasted with those exhibited by their possible competitors both in domestic and foreign properties (within these, fundamentally the leaders at the world level), which should be complemented with an analysis of the historical series of export prices. and the quantities traded in world markets, which will allow to know:

If the product in question has significant appeal in terms of rising prices or growing demand If the company is aligned with the behavior of the world market If the company shows performance within the line of leaders (whether international or national)

Stage II: Characterization of the company.

At this stage of the methodology, a set of information is provided about the company under study, among which the date it was founded, where it is located, what is the name of the company, the mission and the vision for be able to assess whether or not it achieves its corporate purpose, specific characteristics of its production process, that is, the natural resources that make up the raw materials and materials it uses, what is the activity in which it is engaged, main consumers and producers, competitors, their main technical and economic indicators and the peculiarities of business economic activity, since like any phenomenon that is the object of an investigation, a characterization is needed that allows focusing on the interior of the research object.

Stage III: Selection of the group of experts.

Once the company has been characterized in a general way, we proceed to the selection of experts who will participate in the development of the research, for this a committee of experts will be created, in this sense the author of this research will use the Delphi method.

One of the main problems that arises at this stage when the aforementioned method is going to be used is to decide who are the experts or connoisseurs of the subject in question, to do this, we first proceed to calculate the Coefficient of Knowledge (Kc) on the subject in question considering a scale that oscillates between one (does not know anything about the subject) and ten (knows the subject widely), in this way the experts are tabulated by the rows and the scale by the columns.

From here, the Knowledge or Information Coefficient (Kc) is easily calculated through the following formula:

Where (Kc) indicates the Knowledge or Information Coefficient and (n) the value selected by the expert on the scale (see annex 1)

Once Kc has been calculated, the level of argumentation or foundation of the subject to be studied is evaluated and the (Ka) of each expert is calculated according to expression 2:

Where (n _i) is the value assigned by the expert to each source of argument. From the values reflected by each expert, the values are recorded in a standard table (see annex 1a)

Once the values of the Knowledge Coefficient (Kc) and the Argumentation Coefficient (Ka) have been obtained, the value of the Coefficient is obtained of Competence (K), which is finally the coefficient that actually determines which expert will be included in the study and which will be excluded (see annex 1b). This coefficient (K) is calculated as follows:

In correspondence with the calculation of the coefficient of competence, it is necessary to:

0.8 <K <1.0 Competition Coefficient High

0.5 <K <0.8 Average Competency Coefficient

K <0.5 Low Competition Coefficient

The researcher will use for consultation those experts whose coefficients of competencies are high.

Stage IV: Characterization of the company's product portfolio.

The analysis of the portfolio of products or services with which the company operates is essential for the design of a strategy, both with respect to the present situation of the products and services that comprise it and their possible evolution, as well as to detect the possible commercial opportunities that arise and threats from competition. For this, different models have been developed aimed at graphically representing the position of products and services among themselves with respect to certain variables to be evaluated and the possible strategies to follow.

One of the matrix instruments used for this purpose is the Kasavana-Smith matrix, (see Annex 2) which starts from the systematic collection of data, since, based on the results obtained, decisions have to be made regarding the definition of the product or service based on market requirements.

In the investigation, this matrix will be applied as it is the one that best suits the current conditions of our socialist economic model, since it works with indicators that are present in most of our companies that produce goods and services.

After applying this tool and knowing which are the products that classify as Stars within the portfolio, these will be chosen, and with them the work of the rest of the stages of the proposed methodology will continue, since these are the products that the company should to promote its production and commercialization both in the national and international markets, thus obtaining export income indexes.

Stage V: Selection of the company's export potential

At this stage, the products with the greatest potential for export are selected, and then an operational export plan is drawn up. In this step, the Criteria Weighting Method is applied to prioritize exportable products. This method is based on listing a series of criteria based on the main products available to the entity that allow, through their processing through the weighting technique, to conclude which are the main products that can be classified as exportable and which the company should empower. The decision criteria are those that allow to establish differences between the different preselected products and that will give signals about their export potential at the company level,and have been selected based on the main determinants of exports (see Annex 3)

For each of these criteria, the experts must evaluate the situation presented in the specific case studied, with ranges that will oscillate according to the following scale:

5: Criterion status is very favorable4: Criterion status is favorable3: Criterion status is neutral2: Criterion status is unfavorable1: Criterion status is very unfavorable

It is clear that each of these criteria has a certain importance on the final export decision, for which reason a relative importance has been assigned to each one that will allow us to weigh the real value of the situation presented in the specific case studied. As the weights represent a level of relative importance, their numerical indices oscillate between zero and one, while their sum is equal to one (see Annex 4)

Once the situations that present the criteria have been assigned, the initial matrix is multiplied by the weighting indices, obtaining the weighted matrix of export potential . (See annex 4a). From the new values, the average opinion is found in each criterion and with them the algebraic sum is made to know the total value of the criteria in the case analyzed, for this the expression will be used:

In this sense, given that the maximum value that a criterion can obtain is five (very favorable situation) and the lowest is one (very unfavorable situation), and that the weighting indices are constant, the maximum and minimum value that can be obtained Each decision criterion is shown below:

External demand: maximum = 2.00 (0.40 * 5) minimum = 0.40 (0.40 * 1) Exportable supply: maximum = 0.50 (0.10 * 5) minimum = 0.10 (0, 10 * 1) Export price: maximum = 1.00 (0.20 * 5) minimum = 0.20 (0.20 * 1) Employment generation: maximum = 0.50 (0.10 * 5) minimum = 0.10 (0.10 * 1) Required investment: maximum = 0.25 (0.05 * 5) minimum = 0.05 (0.05 * 1) Generation of added value: maximum = 0.25 (0, 05 * 5) minimum = 0.05 (0.05 * 1) Ecological impact: maximum = 0.25 (0.05 * 5) minimum = 0.05 (0.05 * 1)

After weighing each of the selection criteria to determine the export potential of the products selected for the analysis, the export potential of the company is then calculated according to the following expressions:

Based on the foregoing, it is obviously clear that the export potential will always move in a range between one and five, so that, depending on the specific numerical value, the product can be considered with:

Between 1.00 and 1.80: very low potentiality to be exported. Between 1.81 and 2.60: low potentiality to be exported. Between 2.61 and 3.40: medium potentiality to be exported. Between 3.41 and 4.20: high potential to be exported. Between 4.21 and 5.00: very high potential to be exported.

This step should be applied to each product that classifies as a star and whose trends in global markets are attractive.

Conclusions

Local Development implies having to objectively evaluate the product portfolio of the companies.This is only possible when the export potential is determined on the basis of choosing those that may be more attractive from the exportable point of view and by doing so it is establishing itself as The competitiveness of the territory has already been mentioned. The export potential of a company allows it to be more competitive, better understand its advantages and weaknesses in terms of income and allows it to enter more notable markets, constituting an important source for income, in addition to being a substantial part of the endogenous development potential of a locality. The proposed export potential assessment methodology analyzes prior characterization of the entity and its product portfolio,trends in world markets, in order to evaluate the export potential based on its decision criteria, and then select products with exportable potential

recommendations

To government authorities at the provincial level

Assess the applicability of the evaluation methodology of the exporting potential in other entities of the territory according to their specificities.

To the Scientific community

To deepen the studies referring to the export potential as an element of the local endogenous development potential and to consolidate its evaluation procedures

Bibliography

ALBURQUERQUE, F. (2000): Regional development agencies and the promotion of local development in the Spanish state, ECLAC, Santiago de Chile ALBURQUERQUE, F. and others (2001): Local economic development and decentralization in Latin America: a comparative analysis, ECLAC, Santiago de Chile.ALBURQUERQUE, F. and others (2003): Methodology for local economic development, ECLAC, Santiago de Chile.ARAÚJO, L. (1999): Old and new paradigms, regional development and local development, Ciudad y Territorio magazine, Vol. XXXI, Madrid.AROCENA, J. (1987): The paradigms of development and the local, Cuadernos del CLAEH, No. 41, Santiago de Chile.AROCENA, J. (1997): Lo global and the local in the contemporary transition, Cuadernos del CLAEH, No. 78-79, Montevideo.AROCENA (2002): Local development: a contemporary challenge, Editorial Taurus, Montevideo.BELZUNEGUI, B. and others (2007): Macroeconomics. 2nd edition BITAR, P. (2006): Think global, act local, Politics and Social Planning magazine BITAR, P. (2004): The components of local development, Politics and Social Planning magazine BLANCHARD, O. (2006): Macroeconomics, 4th Edition. BOGGIANO, M. (2013): The 7 soy producing countries of the world. Financial Letter Magazine. Available at www.cartafinanciera.com.BOISIER, S. (1990): Territory, state and society: Reflections on decentralization and regional development in Chile, Centro de Estudios y Asistencia Legislativa, Pehuén Editores, Santiago de Chile BOISIER, S. (1999): Territorial development from the construction of synergetic capital, Estudios Sociales magazine, No. 99, Santiago de Chile BOISIER, S. (1999): Development (Local): what are we talking about?,Chamber of Commerce of Manizales, Colombia BOISIER, S. (2005): Is there space for local development in globalization?, CEPAL magazine, No. 86 CASANOVA, A. (2002): Economic Structure of Cuba, Editorial Félix Varela, Havana.