Increased cooperation with foreign trading partners and economic growth recovery in Asia, Latin America and Europe create bountiful opportunities in world markets. The lifting of trade impediments underscores the need to consider export potential and international competition as an integral part of today's strategic business planning in the 21st Century.
In dollar terms, California is the largest exporting state in the United States, followed by Texas, New York and Michigan. Its top export markets are Japan, Mexico and Canada, with Taiwan a distant forth. Currently, the United States is the largest trading country in the world, but Europe and Asia are only a few years behind and gaining momentum. Technology, communication and the free-flow of capital globally are creating an increasingly borderless world market.
Today's hot items in international commerce are high-tech products, including computer, internet, genetic and military technology, products representing American culture and brand-name recognition (i.e.: Levi's and Disney), pharmaceuticals and medical products to name a few. In almost any area where American ingenuity excels, a receptive market awaits overseas.
Many national U.S. corporations have successfully launched bold ventures into overseas markets. Those who cling to a traditional "Ameri-centric" mindset risk missing international opportunities and stand a good chance of being blindsided at home by foreign competitors. However, U.S. companies that are embarking on global marketing arena can make some grand mistakes as well. The most important lesson learned by international trade pioneers is to test the water before diving in.
Success in marketing overseas lies in the details. Extensive research, planning and preparation are needed to custom tailor the company's sales approach to a foreign country's standards and business practices. Critical variables include: country specific governmental regulations, environmental, legal or tariff requirements, industry structure and standards, competitive climate and especially significant, the local customs. Sub-economies within a country as well as geographical constraints must also be considered. (When next-day delivery is an absolutely necessity, a county or region where expedited mail arrives eight days later is obviously not the right market.) Because the economic and political climate is more volatile overseas, national and regional stability, including currency exchange, requires careful scrutiny and constant monitoring.
Another expressly atypical American requisite for conducting business internationally is patience - long-term patience. Many American corporations are run by their stock prices; shareholders expect a certain level of return for their investment. A three to five-year perspective for market development overseas is a prerequisite for financial success. American firms that withdraw from a foreign market will find far higher future barriers to re-entry.
Relationships count in foreign lands. As a general rule, trust comes easily in America. But developing trust is a lengthy process in foreign countries, where business is often entirely relationship-based. Wining, dining and entertaining perspective clients, influential decision-makers and, at times, government officials are cultural norms for cultivating business overseas. Relationships form the basis of trust, not contracts. But once these new customers make a commitment, they are generally far more loyal than their American counterparts.
Global marketing begins with a strategic plan. This process is the road map that guides the way and keeps the company on track. Without a strategic plan, ventures into foreign markets often encounter unforeseen roadblocks and dead ends and may become hopelessly mired in a bureaucratic quagmire of unexpected and prohibitive regulations and legalities. The road to international expansion is paved with colossal failures, many of which could have been averted with a proper planning and preparation. Any international strategic plan should include at least these key elements:
F Identification of the best markets for the product. Aim first for markets that offer the best possible success with the least amount of investment in product modification.
F A SWOT analysis (identification of strengths, weaknesses, opportunities and threats) of the competition, by region or by country, is imperative.
F A distribution plan. Determine the necessary extent of your local presence. Does your product require extensive training? Does it require considerable support after the sale? Who will be responsible for creating promotional literature? The answers to these and other questions will determine whether you go with an exclusive or non-exclusive distributor arrangement, commission-based representation, direct corporate presence or some other kind of alliance agreement.
F Familiarization with the target country's standards is critical. Identify the barriers, from high tariffs and restrictive laws to health and safety codes.
F Knowledge and understanding of industry standards. These include both formal and informal standards, which can be particularly allusive.
F A realistic time table and project schedule. Don't be too ambitious in the beginning. "Rolling out" (a term used by international advisors to describe stages in product development overseas), is highly recommended for new international traders. This method involves selecting a single product and about five or six favorable countries, then entering one country at a time, with several months between new markets.
To collect information that will enable you to identify and analyze international marketing opportunities, a visit to these Internet sites: www.doc.gov, www.ita.doc.gov, www.census.gov, www.tradeport.org and www.exportsbdc.org is a good place to start. In addition, seek out the expert advice and counsel of consultants and others who are familiar with the intricacies of specific industries and regions in the international arena. In this way you will be more likely to maximize opportunities and minimize risks.
Ted Whetstone is a member of the Institute of Management Consultants (imcusa.org), and president of Whetstone Strategy Group. For further information, please call (310) 899-5568 or send e-mail to firstname.lastname@example.org.
Haig Armaghanian is also a member of the Institute of Management Consultants and Managing Partner of Haig Barrett Associates, a consulting firm that assists companies in developing strategies to achieve business growth. For more information, please call (323) 761-7486 or send e-mail to email@example.com.
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