US exports continue to grow, but many American companies lack the international business knowledge to capitalize on this source of sales and profits. Increased trade cooperation and the weakening of the US dollar have created the best export market in years. U.S. exporters have reported growing demand for U.S. products – from popcorn to pet food. The US has enjoyed an 11 percent increase in exports – yet with 95 percent of the world’s population living outside US borders and the prospect of increased global trade, experts question why only 5 percent of US companies are exporting. But how do we start and encourage growth in foreign markets?
1. DEFINITION OF ESSENTIAL ESSENTIALS
Entering new markets provides opportunities for greater revenue and profitability. However, this should be consistent with the company’s overall strategy. Improper, irregular, or indiscriminate export of goods destined for international development can lead to ineffectiveness of the project that soaks up limited resources with little return. Barriers to entry (services, restrictions, and marketing restrictions) must be identified and addressed. A SWOT analysis describing the company’s strengths, weaknesses, opportunities, and threats will identify and help increase the company’s strengths, reduce its weaknesses, and focus on global opportunities.
A global growth plan aligned with business strategy will increase the chances of success. Strategic international development strategies such as sales, distribution, and marketing must be addressed. International development may be different enough from the US model that a lack of experience can limit the chances of success. Above all, there must be clear direction, full management support, and dedicated resources.
2. SECURE PROPER SUPPORT
Small or medium-sized companies starting or expanding international business will find the US Department of Commerce (DOC) a happy partner in helping American companies succeed on a global scale. The organization coordinates resources from 19 Federal agencies to help American businesses develop their international strategies in an increasingly global environment. In an unfamiliar foreign market with confusing regulations, uncertainty, and risk, the DOC can help US businesses navigate export strategies and avoid risks such as payment defaults and brand and intellectual property damage.
DOC’s business services offer an incredible range of services that can be done including international market research, business events and missions, business leads, and introductions to prospective business partners. The Export-Import Bank and the Small Business Administration are teaming up to help finance the export of US goods and services to global markets, helping companies turn global strategies into sustainable businesses.
Businesses focused on international business development can help increase overseas growth. These companies are teams of skilled, experienced professionals who provide effective, cost-effective services to companies committed to increasing revenue and profitability through global growth. The various services offered vary by firm, but all help companies to conceptualize, implement, and manage large or small international projects. These tasks can range from identifying the potential of a product’s foreign market to managing the company’s foreign sales to identifying and qualifying foreign contracts.
A company that wants to enter the global market needs to invest in a dedicated tool for this process. This person should be the link connecting the organization’s resources, skills, and culture to global resources. As the business grows, additional resources must be provided to increase opportunities. This should be thought of as an investment rather than an investment.
3. KNOW THE MARKET ENTRY PROCESS
The right way to enter a company’s market will depend on its global growth. For a company that is just beginning to develop into an international company, entering the market through domestic sales can be the fastest and most cost-effective way to enter a foreign market. Selling through local distributors is risky and offers a learning curve. Once the target country or region has been identified, which will naturally come from a SWOT analysis, the selection process can begin. Various US government agencies and trade organizations can provide information to begin narrowing down the choices.
Media and trade shows are also a good source. Factors to consider when choosing a market may include factors such as geographic location, market size and potential, cost of entry, and competitive environment. To narrow down the possibilities, visiting the country is essential. To get there, using marketing guidelines, competitive analysis, local government support, and interviewing potential stakeholders will provide information and insights. The main points in choosing a distributor are: willingness to provide a dedicated person, market leadership or history, business savvy, complementary and non-competitive products or services, location management, and financial stability.
Entering a new international market is often seen as an expansion of an existing business. As a result, many American companies ignore business guidelines that require thorough market analysis. Only with due diligence should one disclose information about services or products offered by advertising programs.
The entry method a company prefers – national distribution, joint venture, merger, or acquisition – depends on the company’s main objectives from sales opportunities to market-based growth opportunities.
Economic interdependence will lead to mutual cooperation. US companies need to ensure that potential partners share both short- and long-term goals to reduce diversity of thought and effort. Common and shared business/ethical principles increase communication, transparency, and efficiency. Employees must have complementary strengths and weaknesses to create a strong and effective partnership. Policies and procedures for conflict resolution and reconciliation must be written and agreed upon by all parties involved in order for the partnership to be successful.
4. CREATE A WORKSHOP
All markets are similar. However, effective international marketing begins with recognizing that markets are also different in ways that are not immediately apparent. The key is to understand consumers and identify their needs through traditional market research. Focus groups can be particularly useful in identifying what foreign buyers want and need. Advertisers used to make offers must be local or local representatives. Employees who have a thorough understanding of market characteristics and idiosyncrasies will be particularly useful in disseminating the desired message and creating and enhancing the brand’s image. Language skills and intercultural communication are important in international marketing.
Perfect planning is essential. As the company executes a global strategy guided by a strong business plan, it is important to celebrate milestones and demonstrate against industry leaders.
Although by no means complete, these four steps will serve as a guide to successfully entering the global market and growing.