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Encouraged and facilitated by government, these schemes are designed for small- and medium-sized enterprises (SMEs) and are used primarily – but not exclusively – for export activities. In general, an export grouping scheme provides the opportunity for member companies to spread the initial costs and risks of international market entry, to share information and experiences, and to pool resources to support stronger promotional efforts.
Illustrative uses of network schemes are the ‘export circles’ in Finland which have the requirement that each circle be kept small and that the companies must be noncompetitive and the Joint Action Group (JAG) scheme in Australia which was initiated by the semi-government agency the Australian Trade Commission as a way of improving performance of Australian exporters. One requirement of such groups is that member companies must accept group-determined goals and activities, which is often difficult for smaller companies to do especially when the group comprises competitors (Pieterse, 2004). Two approaches have been used to form groups: (1) supply based, which starts with formation of a group an. then seeks an opportunity, and (2) demand driven, which starts with an international prospect or opportunity and then the group is formed.