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Going International through International Business Development

In today’s global economy, many companies cannot afford to live with the misconception that their domestic markets will always be strong. For this reason, many companies should choose to market overseas as well. I very often encourage our companies in the USA by exporting their “Made in the USA” products. If you don’t sell locally enough because of the downturn of the economy, it’s the right time to do it. The fact is that almost 98% of the world’s population and potential customers are outside the United States. 75% of the worlds’ purchasing power is outside the United States and growing! 70% of U.S. exporters have less than 20 employees. By taking a venture into international markets, a company can avoid seasonal fluctuations in sales and increase profits in general through exposure to a greater number of prospects. Furthermore, customers who themselves take advantage of the Internet look for suppliers of goods and services in foreign markets.

The decision to go international must be made with care, as there are many risks and potential obstacles to consider. Cultural and language barriers are among the most obvious of these considerations. Variations in religious beliefs, societal norms, and business negotiation styles all have an impact on how business needs to be conducted when dealing with foreign counterparts. Language barriers may present an obstacle when trying to communicate the benefits and advantages of a company’s products and services overseas.

There are inherent political and economic risks when expanding into foreign markets. Instability of some foreign governments can pose a threat to the security of a business overseas. Even natural disasters happen. Foreign exchange might present a barrier to get paid when you sell abroad.

The benefits of going international often remain an advantage, even with all of the risks carefully considered. An organization that wants to go overseas needs to be prepared by having developed a specific international marketing plan, and decide how to enter the targeted market. An international marketing plan should outline and define the product or service to be sold and the country or countries in which it will be sold. In doing so, it is essential to consider whether a product that works in the United States will work in other markets.

A company that wishes to expand internationally needs to be familiar with the target country’s culture and determine the feasibility of marketing its product or service in that environment. Market conditions must be assessed to ensure that a new company can win a share of the foreign market. Tariffs, duties and compliance with United States export administration regulations are other important issues to consider as well. These considerations require some expertise in the financial and legal aspects of exporting.

Developing the required organizational processes and allocating appropriate resources to an international effort often requires creating a separate export department within an organization that is responsible for all aspects of dealing with foreign markets. Many companies attempt this by having a single sales manager and his or her assistants responsible for setting a budget, shipping goods and developing international growth. However, this can be an expensive alternative when overhead and liability costs are considered.

If a company chooses going alone may need from three to five years to develop a sizeable market share. In many cases, assistance from an outside source can dramatically reduce the time it will take to become established in foreign markets.

The use of a consultant or a company with the “Know who” and the “Know How” is often the most feasible way to break into an international market. In effect, these marketing authorities can manage your entire international sales effort more quickly and efficiently. They can also provide localization services, starting but going beyond, simply translating materials to the desired language. Localization refers to adapting a company’s entire image to fit another culture. Export management companies offer working capital, clearing customs paperwork, and trade insurance for a fee and commission. Beyond the obvious value of intimate know-how and access to extensive overseas contacts that they can provide is the benefit of having after sales support. A good export management consultant has years of specialized experience in knowing or negotiating with governments, freight forwarders and banks.

Strategic alliances for a win-win situation are the best deal at the moment. However, there is another way that organizations may consider when expanding into foreign markets by establishing a joint venture. It is an effective way to equilibrate any political or economic risks that may not be immediately apparent. Setting up a joint venture can also dramatically reduce the time it will take to bring a product into a new market overseas because the burden of marketing and sales is shared with another company already operating in the foreign market. When establishing a joint venture, though, it is vital to find a trusted partner. This requires due diligence in the host market and performing checks and balances to ensure that foreign partners can sufficiently cater to the needs of both an organization and its customers. To be effective, the proposed alliance must bring enough value for both parties to invest directly in a joint venture. Sufficient financial, physical, and managerial resources must be available to manage a new marketing effort.

It is also important to consider that training and support are essential to succeed in doing business in international markets and a Website designed for the market place with a separate page for international sales. Consider also a product demonstration made through video development and company and product’s documentaries.

It’s important “to get in the right pipeline” managing any project overseas, having a counterpart that speaks the languages and knowledge for any company to succeed abroad. Someone who knows the markets and regions, who has the network, has the “Know How” and the “Know Who,” and last but not least, being able to partnering proactively in order to improve efficiencies and reduce costs.

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About the Author

William G Mora, GM Consulting - Gamma Brands
6260-A DuPont Station Court
Jacksonville, FL 32217

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