Global Aspects of Entrepreneurship

1
Global Aspects of Entrepreneurship

• National borders are no longer defensible against
  the invasion of knowledge, ideas, and financial
  data.
• -Walter Wriston
• The new electronic interdependence recreates the
  world in the image of a global village.
• -Marshall McLuhan

2
Why Go Global?

• Offset sales declines in the domestic market.
• Increase sales and profits.
• Extend their products life cycle.
• Lower manufacturing costs.
• Lower the cost of their products.
• Improve competitive position and enhance
  reputation.
• Raise quality levels.
• Become more customer-oriented.

3
Why Go Global? (contd)

• Before venturing into the global marketplace,
  entrepreneurs should ask themselves six
  questions
• Is there a profitable market in which our firm
  has the potential to be successful over the long
  run?
• Do we have and are willing to commit adequate
  resources of time, people, and capital to global
  campaign?
• Are we considering going global for the right
  reasons?
• Do we understand the cultural differences,
  history, economics, value systems, opportunities,
  and risks of conducting business in the country
  (or countries) we are considering?
• Is there a viable exit strategy for our company
  if conditions change or the new venture is not
  successful?
• Can we afford not to go global?

4
Strategies for Going Global

• Creating a presence on the web
• Trade intermediaries
• Export management companies
• Export trading companies
• Manufacturers export agents
• Export merchants
• Resident buying offices
• Foreign distributors
• The value of using trade intermediaries
• Joint ventures

5
Strategies for Going Global (contd)

• International franchising
• Identify the county or countries that are best
  suited to the franchisers business concept.
• Generate leads for potential franchisees.
• Select quality candidates.
• Structure the franchise deal.
• Countertrading and bartering
• Foreign licensing

6
Strategies for Going Global (contd)

• Exporting
• Step 1 recognize that even the tiniest companies
  and least experienced entrepreneurs have the
  potential to export.
• Step 2 analyze your product or service.
• Step 3 analyze your commitment.
• Step 4 research markets and pick your target.
• Step 5 develop a distribution strategy.
• Step 6 find your customer.
• Step 7 find financing.
• Step 8 ship your goods.
• Step 9 collect your money.

7
Strategies for Going Global (contd)

• Establishing international locations
• Importing and outsourcing
• Entrepreneurs who are considering importing goods
  and service or outsourcing their manufacturing to
  foreign countries should follow these steps
• Make sure that importing or outsourcing is right
  for your business.
• Establish your target cost for your product.
• Do your research before you leave home.
• Be sensitive to cultural differences.
• Do your groundwork.
• Protect your companys intellectual property.
• Select a manufacturer.
• Provide an exact model of the product you want
  manufactured.
• Stay in constant contact with the manufacturer
  and try to build a long-term relationship.

8
Barriers to International Trade

• Domestic barriers
• International barriers
• Tariff barriers
• Nontariff barriers
• Quotas
• Embargoes
• Dumping
• Political barriers
• Business barriers
• Cultural barriers

9
National Trade Agreements

• The world trade organization (WTO)
• NAFTA
• Among NAFTAs provisions are
• Tariff reductions
• Elimination of nontariff barriers
• Simplified border processing
• Tougher health and safety standards
• Central america free trade agreement (CAFTA)

10
Conclusion

• Although there are no sure-fire rules for going
  global, small businesses that want to become
  successful international competitors should
  observe these guidelines
• Make yourself at home in all three of the worlds
  key markets North America, Europe, and Asia.
• Appeal to the similarities within the various
  regions in which you operate but recognize the
  differences in their specific cultures.
• Develop new products for the world market.
• Familiarize yourself with foreign customs and
  languages constantly scan, clip, and build a
  file on other cultures their lifestyles, values,
  customs, and business practices.

11
Conclusion (contd)

• Learn to understand your customers from the
  perspective of their culture, not your own.
• Glocalize. Make global decisions about
  products, markets, and management but allow local
  employees to make tactical decisions about
  packaging, advertising, and service.
• Recruit and retain multicultural workers who can
  give your company meaningful insight into the
  intricacies of global markets.
• Train employees to think globally, send them on
  international trips, and equip them with
  state-of-the-art communications technology.
• Hire local managers to staff foreign offices and
  branches.
• Do whatever seems best wherever it seems best,
  even if people at home lose jobs of
  responsibilities.
• Consider using partners and joint ventures to
  break into foreign markets you cannot penetrate
  on your own.