Learn how to take Your Business Internationally
Is it Time to Take Your Products to Overseas Markets?
If your domestic business is beginning to dry up, or it is no longer growing at the rate you would like, it might be time to look at business opportunities outside of the U.S.
In this article you will read:
- When you should begin to think about an international sales strategy.
- Six steps to follow that will help you achieve your goals.
Taking Your Business to International Markets
Having worked in international market development for 35 years, in addition to having taught courses in International Business and International Marketing at two universities in China, I have had my share of successes and failures. Undoubtedly, I have also seen others in this business succeed, but also fail.
Most of the failures I have seen, have been due to lack of preparation, insufficient knowledge of foreign markets, as well as little or no knowledge of the process necessary to penetrate these markets.
Recently, I have come up with six steps that any size company can take to expand beyond their traditional domestic markets. I would like to share them with you.
Before we get started, keep in mind that making the decision to take your company’s products abroad will require commitment, not only in time and effort, but also financially. Most importantly, it will take a certain degree of intellectual investment. Once you step outside of our diverse, competitive but ultimately affluent market place, you will find that everything changes.
In our globalized world, you will find markets that differ from ours, not only in size, but also in their legal, financial, political and cultural makeup. You will find fierce competition, widely differing product and service needs, different languages and different attitudes regarding clothing styles, foods, education, human connections, and much more.
While the following suggestions are not meant as the be-all and end–all of international business, they are meant as a simple framework for those companies which have never taken their first step outside of the U.S. and/or for those that have just begun in this journey.
When to Consider Doing Business Internationally
Big companies are not the only ones that can benefit from taking their products to foreign markets. Small and medium size companies can also benefit from selling outside of the United States.
In fact, the most common reasons for deciding when it is a good time to look for foreign markets to sell your products or services are:
- When domestic markets are either getting saturated with your products or similar ones.
- When you are facing an extremely competitive and/or price sensitive local environment.
- When you are facing a declining product life cycle locally.
- If your company is facing extreme fluctuations in sales and profits due to seasonal demand cycles, or when you identify a demand cycle in a foreign market different from yours that you feel you might be able to exploit.
- When you are facing foreign competition and feel it is time to take your business into their own backyard.
Six Steps to Follow
The following six steps should help you determine how to move forward and make your international sales efforts a rewarding and profitable experience.
First Step — Decide whether your products or services have a market in other countries.
This is not an easy feat to accomplish since in all likelihood researching the internet alone, while extremely low budget, will most likely yield incomplete information. It will also not put you in direct contact with decision makers or companies that could turn out to be potential partners.
Most likely you will have to take some sort of exploratory trip that will allow you to get a feel of what international markets are all about.
A good approach is to start out by attending trade shows in foreign venues, during which you can walk around and gain some intelligence regarding local and global players and the products they offer or buy. Keep in mind that most countries host trade shows that appeal to companies from all over the world, attracting thousands of visitors.
While visiting any of these trade shows, you should be able to get price lists, catalogs, and have the opportunity to speak directly with companies that could be your customers or your competition.
Very possibly you could come across potential customers or business partners that you can arrange to visit at a later date on their home turf. Once you gain some confidence in the viability of your product offering, you might decide to not just visit a trade show, but to actually get a booth and participate as an exhibitor.
You should be able to find a trade show for every category of business imaginable in many different countries. MyExpoWorld offers a website in which you can search for worldwide trade show venues to fit any industry. Go to http://www.expodatabase.com/international-trade-shows/ to find a trade show that suits your needs.
Second Step — Learn about what it takes to do business internationally.
Become familiar with International Commercial Terms or Incoterms. These are published by the International Chamber of Commerce and they are used in international commercial transactions. For more information on Incoterms you can visit: https://iccwbo.org/resources-for-business/incoterms-rules/incoterms-2020/
If you are in the consumer packaged goods industry, the probability of having to make language, weights and measures changes to the packaging of your existing product line is high. Find out what these changes will entail.
Understand that you will be dealing with different cultures, laws, regulations, mind-sets, currencies, safety concerns, and financial institutions. Fortunately, you can research all of these different concerns on-line or through the many books written about international business.
Some recommended books about doing business abroad are:
- Kiss, Bow, or Shake Hands: The Best Selling Guide for Doing Business in More Than 60 Countries. By: Terri Morrison and Wayne Conaway.
- The Culture Map: Breaking Through the Invisible Boundaries of Global Business. By: Erin Meyer
- International Business: Competing in the Global Market Place. By: Charles W.L. Hill and G. Tomas M. Hult.
Third Step — Put together an international business plan that will evaluate your needs as well as set your goals.
Begin to formulate a pricing strategy keeping in mind that you could be doing business with underdeveloped, developing or developed countries.
Familiarize yourself with other countries’ Per Capita GDP, Median Per Capita income, Human Development Index, GINI Coeffecient and whatever other economic information you can dig up. Most importantly, include this information in your business plan as a way of deciding how you will proceed with your international efforts.
Include in your business plan any human resource considerations you feel will be necessary to accomplish your plans. Keep in mind that you might need people with international freight forwarding experience, know-how in obtaining export licenses, able to process international orders, or people with foreign language skills.
Bottom line, make your business plan as comprehensive as possible.
Fourth Step — When you are ready for your next step, don’t overextend yourself.
Pick one or two small countries on your first go-round, where mistakes will not be overly costly. It is also recommended that you initially target countries that are not too far away. Finally, don’t choose countries with exotic cultures where one seemingly insignificant misunderstanding can harm any future business transactions.
Good countries to start out with are Puerto Rico (although it is U.S. territory, it does present some challenges due to different rules and regulations than those in the continental U.S.), Costa Rica, Panama, selected cities in Mexico, the Dominican Republic, and some of the larger Caribbean islands. Because of the similarities between the U.S. and Canada as well as both countries being NAFTA signatories, a visit to our neighbor to the north could be worthwhile.
After you gain additional experience and are able to modify your products, processes and services to meet the needs of foreign markets, you can begin the process of looking for larger and wealthier countries to penetrate.
Fifth Step — Understand the different ways to enter foreign markets.
The following are strategies that companies should consider:
- Developing of local manufacturing, assembly, or local sales or service establishment
- Licensing or franchising to a company in the host nation
- Establishing a joint venture with a local company
- Establishing a new wholly owned subsidiary
- Acquiring an established enterprise
Most small to medium size companies start by exporting. As they gain more experience and their products or services gain acceptance, they adapt other market entry strategies to fit their growth needs.
Make your decision on which of the above mentioned entry strategies to use based on the following criteria:
- Transport costs
- Trade obstructions which include tariffs, and non-tariff barriers
- Political risks
- Economic risks
- Firm’s short, medium and long term strategy
Sixth Step — Finally, and most importantly the U.S. DEPARTMENT OF COMMERCE can help.
The U. S. Department of Commerce offers various services for fairly nominal fees that can help American companies find overseas distributors, retailers, commission sales representatives as well as conduct market research efforts and overseas promotional events. The following are some of the services the U.S. Dept. of Commerce — Export Assistance Dept. offers American companies:
- Gold Key Service — This is a match making service which uses a network of local commercial trade specialists that work to match American companies with local distributors, wholesalers, retailers or commission sales reps. The service vets and arranges meetings with interested partners.
- International Partner Search — This service helps you find potential agents, distributors or other strategic partners overseas.
- Trade Leads — A service that allows you to find the latest export opportunities and government tenders in overseas markets,
- Export Guides — This service provides the most up-to-date global trade information for American companies. It helps you get started with export basics.
- Promote and Expand Service — This service helps your brand awareness and market exposure in countries around the world. Find and establish relationships with potential overseas business partners.
- Single Company Promotion — Get help from product launches to technical seminars. Trade specialists will help you organize a promotional event to reach a target audience of clients and key decision-makers in markets around the world.