Major restrictions of exporting/ importing as an entry mode of international business are as follows:
- As the product physically move from one nation to another, exporting/importing comprises of additional transportation, packaging and insurance costs. Transportation costs alone become an inhibiting factor to the exports and imports particularly in the case of heavy items. On landing the shores of foreign countries, these products are subject to custom duty and other different levies and charges. On the whole, all these costs and payments significantly increase product costs and make them less competitive.
- Exporting is not a practical alternative when import limitations exist in a foreign country. In such a circumstances, firms have no option but to opt for other entry ways such as licensing/franchising or joint venture which makes it reasonable to make the product available by way of manufacturing and marketing it locally in foreign countries.
- Export companies mainly function from their home grounds. They manufacture in the home country and then transport goods across to foreign countries. The export companies in general have not much contact with the overseas markets, except for a few visits by the executives of export companies to foreign countries to promote their products. This places the export companies in a detrimental position in comparison with the local companies which have their base near the customers being able to better understand their needs and serve them. On the other hand, apart from these limitations, exporting/importing is the most opted way for business companies when they involve themselves initially with international business. As is customary, companies start their foreign operations with exports and imports, and later having gained awareness with the foreign market operations and switch over to other forms of international business operations.