International Business Strategies
For Global Business Success
International business strategies are a normal part of doing business no matter where your business is located in the world. Global businesses will compete with you, do business with you, and even put you out of business if you aren't careful. You no longer have a choice to do or not to do global business.
Businesses, large and small, must formulate international business strategies to function in the global economy. Global business activity is just as normal today as doing business in your local community was 50 years ago.
Doing business globally has a number of appealing factors. Some of them are,
- Build a broader customer base.
- Prevent adverse effects of seasonal business swings in your domestic market.
- Utilize excess manufacturing capacity sitting idle at home.
- Lower production costs by using lower priced labor abroad.
Most successful global businesses have some things in common such as,
- They have a strong international vision.
- They either have or acquire international management experience.
- They develop strong working partnerships with foreign business people.
- They offer differentiated technology or know-how not available in foreign markets.
Figuring out when to go global is easy. The time is now. Even local businesses such as barber shops, health clubs, and tax preparation services need to be aware of what is happening globally in their respective fields. New ways of doing business and newly created products can affect the way local businesses do their work.
Figuring out which foreign countries to do business in isn't as complicated as you might think. You need to know four basic things in formulating your international business strategies,
- Who will use the product or service?
- How do those consumers define value?
- How will you keep up with market trends there?
- How can you increase your product's market share?
A country analysis of possible choices is the next step. Some of the things you need to consider are,
- Political stability.
- Currency stability and value.
- Cultural values and ethics.
- Language familiarity.
- Receptiveness to foreign intervention in foreign local markets.
- Trade restrictions and tarrifs.
- Legal barriers.
- Standard of living.
- Ease of travel to foreign locations. And,
- Infrastructure of foreign communities.
The United Nations Statistics Division has an online website at, http://unstats.un.org/unsd/trade. This website contains the Standard Industrial Trade Classification (SITC) codes established by the United Nations that will help you to find information on demand for a specific product or service in your country of interest.
The North American Industry Classification System (NAICS) at, www.census.gov/epcd/www/naics.html, which replaced the Standard Industrial Classification system provides business statistics about North American industries.
The NAICS and SITC codes are keys to a tremendous amount of useful information. You can calculate the demand for your product by obtaining information on the following.
- The value of global imports of the product measured in dollars.
- Import records historically reveal the amount of growth a particular product has in a foreign market. You are looking for the level of demand.
- The amount of U.S. imports into a country.
Foreign agents can be of great assistance in your foreign marketing efforts. The following are some differences among them.
- Agents purchase your company's products at a huge discount off your list price, and then sell them in their countries, and take responsibilities for collections. They can save you time and money. Remember though that you don't have full control over an agent's activities or pricing.
- Exporting Trading Companies (ETC) typically specialize in certain countries or regions, and maintain a large sales force. The ETC locates a manufacturer, buys the product, and sells it to the foreign country after identifying foreign market desire for your products.
- Sales representatives work on commission, and don't buy or warehouse your products, but find outlets for selling your products by operating as independent representatives or as reps for export trading companies. Sales reps usually require little or no training, and are familiar with local foreign markets.
Three things to consider in finding a good intermediary are,
- Get a qualified referral from satisfied customers such as foreign businesses that have worked with a respective intermediary.
- Check with the U.S. Department of Commerce to obtain a list of qualified intermediaries in your countries of interest.
- Trade shows can be of great benefit in finding foreign business partners and marketing support.
You may desire to set up manufacturing operations or foreign subsidiaries in other countries. This decision making process is a little more involved than merely selling abroad or importing. You will have to do your "homework" to work through this strategy effectively.
Joint venture (JV) partnerships are another strategic option to go global. This is where two or more parties team up to execute a project, in this case foreign. Each JV member brings some special know how and qualifications to the project. JV projects are normally for relatively short durations (one to three years).
The U.S. government provides support for international business activity. The following are some of the resources you may access conveniently online.
The Overseas Private Investment Corporation provides financing for foreign business ventures. Go to, www.opic.gov.
The U.S. Department of Commerce can help you find trade specialists in 107 U.S. cities and more than 80 countries all over the world with the purpose of helping you secure sales in global markets. Go to, www.ita.doc.gov/cs.
Other helpful U.S. government websites are the following.
The above list isn't exhaustive, but rather just some of the many helpful resources you may access online. These sites can stimulate your thinking with regard to international business strategies, and help you get the wheels turning on doing global business.
International business strategies should be merged into your overall strategic plans. Strategic planning isn't complete without international business strategies.
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