Four Steps to Accelerate International Business Growth : US exports continue to grow, but many American companies lack the international business knowledge to take advantage of this potential source of increased sales and profits. Proliferating trade agreements and a weak US dollar have produced one of the most lucrative export markets in decades.
Foreign importers of US goods are reporting increasing demand for US products — from popcorn to pet food. The United States has enjoyed an 11th straight increase in exports — but with 95 percent of the world’s population living outside U.S. borders and increasingly promising international sales prospects, experts question why only 5 percent of U.S. companies are currently exporting. But how do we initiate and sustain growth in overseas markets?
1. DEFINING STRATEGIC NEEDS
Leveraging new markets provides opportunities to increase revenue and profits. However, these initiatives must be consistent with the company’s overall strategy. Inconsistent, sporadic, or unfocused deployment of resources geared toward international growth can result in underperforming initiatives that absorb limited resources with little return. Barriers to entry (duties, regulations, and trademark restrictions) need to be identified and addressed.
A SWOT analysis detailing a company’s strengths, weaknesses, opportunities and threats will identify and help maximize the company’s strengths, minimize its weaknesses, and provide a focus on international opportunities.
An international growth plan that is consistent with the company’s strategy will increase the chances of success. The tactical aspects of international development such as sales, distribution and marketing need to be addressed. International growth factors can differ enough from the US model that a lack of familiarity can dramatically reduce the chances of success. Above all, there must be clear direction, full management support, and dedicated resources.
2. SAFE HELP RIGHT
Small or midsize companies starting or expanding into international business will find the US Department of Commerce (DOC) an enthusiastic partner in helping American companies succeed globally. The organization coordinates the resources of 19 Federal agencies to help American businesses plan their international strategies in an increasingly globalized environment.
In an unfamiliar foreign market with confusing regulations, uncertainty, and risk, a DOC can help U.S. businesses. navigate the sales process overseas and avoid hazards such as default and misuse of trademarks and intellectual property.
DOC commercial services provides a range of actionable services of a very high quality including in-country market research, trade events and missions, trade prospects, and introduction to potential business partners. The Export-Import Bank and Small Business Administration came together to help finance exports of US goods and services to international markets, enabling companies to turn international prospects into solid sales.
Companies that specialize in international business development can help start foreign expansion. These companies are a group of highly skilled and experienced professionals who offer practical and cost-effective assistance to companies committed to maximizing revenue and profit potential through accelerated international growth.
The range of services offered varies by company, but overall they help companies conceptualize, implement, and manage international business development projects large or small. These services can range from determining foreign market potential for a product to managing a company’s export sales to identifying and qualifying foreign strategic alliances.
A company wishing to penetrate the international market needs to assign resources fully dedicated to this initiative. These individuals must be at the forefront of linking organizational resources, knowledge and culture with international initiatives. As the business grows, additional resources must be allocated to maximize opportunities. This should be considered an investment rather than an expense.
3. DETERMINING THE MARKET ENTRY STRATEGY
The appropriate market entry strategy of a company will depend largely on its level of international development. For a company just starting its international development, market penetration through domestic distributor sales may be the quickest and most cost-effective way to enter foreign markets. Selling through domestic distributors is relatively low risk and will provide valuable learning opportunities.
Once the target country or region is identified, a process that will naturally derive from a SWOT analysis, the selection process can begin. Various US government agencies and trade associations can provide a wealth of data to begin narrowing down the options.
Trade publications and events are also an excellent resource. Factors to consider when selecting a market may include criteria such as the regulatory environment, market size and potential, entry costs, and competitive environment. To further narrow the possibilities, a domestic visit is necessary.
Once there, the use of trade guidelines, competitive evaluations, local government assistance, and interviews of potential candidates will provide additional information and insight. Key considerations in selecting a distributor are: willingness to assign dedicated resources, market leadership or track record, marketing know-how, complementary and non-competitive products or services, site inspections, and financial stability.
Penetrating new international markets is often seen as an extension of an existing domestic business. As a result, many American companies ignore standard business guidelines that require rigorous market analysis. Only after conducting thorough due diligence can one outline the service or product offering and the accompanying marketing program.
The company’s preferred way of entry—domestic distribution, joint venture, merger, or acquisition—will depend on the company’s primary objectives from opportunistic selling to positioning for long-term market-driven growth.
Increasing economic globalization leads to the creation of strategic alliances. U.S. company must ensure that potential partners share short-term and long-term goals to reduce differences in ideas and efforts. Shared values and shared business/ethical standards will enhance communication, transparency and effectiveness.
Partners must have complementary strengths and weaknesses to build stronger and more effective alliances. Principles and processes for resolving conflicts and relationships must be developed and agreed upon by all interested parties so that the partnership can run smoothly.
4. EFFECTIVE MARKETING DESIGN
All markets have something in common. However, effective international marketing begins with the realization that markets are also different in less obvious ways. The key is to understand consumers and identify their needs through culturally specific market research. Focus groups can be very effective in identifying the wants and needs of international consumers.
The advertising agency used in developing the offering must be local or have local representation. Employees with thorough knowledge of the characteristics and features of the market will be very effective in communicating the desired message and creating and enhancing the brand image. Language skills and an affinity for different cultures are important assets when marketing internationally.
Flawless execution is the key. When a company pursues an international strategy guided by a solid business plan, it’s important to celebrate achievements and benchmarks against industry leaders.
Although not comprehensive, these four steps will help guide the successful entry and growth of international markets.