Four Steps to Accelerate International Business Growth
US exports continue to grow, but many US companies lack the international business knowledge to capitalize on this potential source of increased sales and profits. The proliferation of trade agreements and the weakening of the US dollar have created one of the most favorable export markets in decades. Foreign importers of American products report growing demand for American products, from popcorn to pet food. The United States has enjoyed 11 consecutive quarters of growing exports; However, with 95 percent of the world’s population residing outside US borders and an increasingly promising international sales outlook, experts wonder why only 5 percent of US companies currently export. But how do we start and maintain growth in unfamiliar markets?
1. DEFINE THE STRATEGIC NEEDS
Taking advantage of new markets provides the opportunity to increase revenue and profits. However, this initiative must be consistent with the overall strategy of the company. Inconsistent, sporadic, or unfocused deployment of resources directed at international growth can result in an underperforming initiative that sucks up limited resources with poor performance. Barriers to entry (tariffs, regulations, and trademark restrictions) need to be identified and addressed. A SWOT analysis detailing the company’s strengths, weaknesses, opportunities, and threats will identify and help maximize the company’s strengths, minimize its weaknesses, and focus on the international opportunity.
An international growth plan consistent with corporate strategy will increase the chances of success. You need to address the tactical aspects of international development, such as sales, distribution, and marketing. International growth factors may differ enough from American models that unfamiliarity dramatically reduces the chances of success. Above all, there must be clear direction, full management support, and dedicated resources.
2. APPROPRIATE ASSISTANCE INSURED
Small and medium-sized businesses starting or expanding in international business will find the United States Government Department of Commerce (DOC) an enthusiastic partner to help American businesses succeed globally. This organization coordinates resources from 19 federal agencies to help US companies plan their international strategies in an increasingly globalized environment. In an unfamiliar foreign market with confusing regulations, uncertainty, and risk, the DOC can help American businesses navigate the overseas sales process and avoid dangers such as defaults and misappropriation of trademarks and intellectual property.
DOC’s business service offers a surprisingly actionable variety of quality services including in-country market research, trade missions and events, business contacts, and presentations to potential business partners. The Export-Import Bank and Small Business Administration unit to help finance exports of US goods and services to the international market, enabling companies to convert international leads into strong sales.
Firms specializing in international business development can help drive foreign expansion. These firms are groups of highly qualified and experienced professionals who offer practical and profitable assistance to companies committed to maximizing revenue and profit potential through accelerated international growth. The range of services offered varies by company, but generally they help companies conceptualize, implement and manage large or small international business development projects. These services can range from determining a product’s foreign market potential to managing a company’s export sales to identifying and qualifying foreign strategic alliances.
A company wishing to penetrate the international market must allocate a fully dedicated resource to this initiative. This individual must be the axis that connects the resources, knowledge and culture of the organization with the international initiative. As the business develops, additional resources must be allocated to maximize the opportunity. These should be seen as investments rather than costs.
3. DETERMINED MARKET ENTRY STRATEGY
The appropriate market entry strategy for a company will largely depend on its level of international development. For a company just beginning its international development, market penetration through in-country dealer sales may be the fastest and most cost-effective way to enter a foreign market. Selling through distributors in the country is relatively low risk and will provide valuable learning opportunities. Once the destination country or region has been identified, a process that will naturally follow from the SWOT analysis, the selection process can begin. Various US government agencies and trade associations can provide a large amount of data to begin narrowing down your selection.
Publications and trade events are also an excellent source. Factors to consider when selecting a market may include criteria such as the regulatory environment, market size and potential, cost of entry, and competitive environment. To further reduce the chances, a visit to the country is required. Once there, the use of business leads, competitive evaluations, local government assistance, and interviews with potential candidates will provide additional information and knowledge. The main considerations when selecting a reseller are: willingness to allocate a dedicated resource, market leadership or track record, marketing experience, complementary and non-competitive products or services, site inspection, and financial stability.
The penetration of a new international market is often perceived as an extension of the existing national business. Consequently, many American companies overlook standard business guidelines that require rigorous market analysis. Only after thorough due diligence can a product or service offering and accompanying marketing programs be crafted.
The preferred mode of entry for a business – in-country distribution, joint venture, merger, or acquisition – will depend on the primary goals of that business, from opportunistic sales to positioning for long-term market-driven growth.
Economic globalization will increasingly lead to the creation of strategic alliances. American companies must ensure that potential partners share short-term and long-term goals to reduce divergence of ideas and efforts. Common values and shared ethical / business standards will improve communications, transparency, and effectiveness. Partners must have complementary strengths and weaknesses to build a stronger and more effective alliance. The principles and processes for conflict resolution and the relationship must be written and agreed upon by all stakeholders for the partnership to run smoothly.
4. DESIGN AN EFFECTIVE MARKETING
All markets have points in common. However, effective international marketing begins with the awareness that markets are also different in ways that are not immediately apparent. The key is to understand consumers and identify their needs through culturally specific market research. Focus groups can be especially effective in identifying the wants and needs of international consumers. The advertising agency used to develop the offer must be local or have local representation. Employees with a deep understanding of the characteristics and idiosyncrasies of the market will be particularly effective in communicating the desired message and creating and enhancing the brand image. Language skills and an affinity for different cultures are fundamental assets in international marketing.
Flawless execution is key. As a company executes international strategy guided by a solid business plan, it is important to celebrate milestones and compare them with industry leaders.
Although they are not exhaustive, these four steps will help serve as a guide for the successful entry and growth of the international market.