It’s not a matter of if, rather when you go international.

1
Its not a matter of if, rather whenyou go
international.

• What strategy will you choose?
• Exporting ( Most common, least risky)
• Licensing
• Licensor offers know-how, technology, brand name
  in exchange for royalties
• Lower risk but also lower profits
• Franchising
• Franchisor provides standard package of products,
  systems and management services while franchisee
  provides capital, market knowledge personal
  involvement
• Joint Venture
• Foreign company and local company establish a
  jointly owned new company
• Wholly Owned Subsidiary (Most costly, Most risky)
• Greenfielding build from ground up
• Purchase existing facility

2
Choosing Exporting

• Exporting is selling goods in foreign markets as
  a way to earn profits.
• An Export Business is a venture where a firm buys
  or represents products or services produced in
  one country and sells them in other countries

3

• Exporting (most common, least risky)
• Direct to customer (agent, retailer, internet) in
  another country
• Indirect to buyer (WalMart, Sears, or
  intermediary) in home country who exports
  product

4
Why Export?

• Increase Sales
• Extend the market for a product that has proved
  popular at the domestic level.
• Respond to overseas buyer with whom a profitable
  business relationship has emerged.
• Lengthen a product's life cycle by selling in
  foreign markets once a product's popularity
  declines in the home market and wanting to take
  advantage of seasonal differences (e.g., when it
  is summer in America, it is winter in Australia!)
• Avoid Changing Domestic Conditions
• Turn to different markets when a company feels
  the regulations on its product become too strict
  at home. (cigarette industry in the U.S.)

5
Disadvantages of Exporting

• 1. Increased costs.E.g. Traveling abroad to
  obtain orders High management fees, shipping
  charges, agent's fees, etc.,
• 2. Understanding and following import laws and
  regulations, which vary and change rapidly and
  dramatically in some cultures.3. Transportation
  policy.Shipping rules and regulations
  complicated
• 4. Currency. The earlier advantage of a strong
  currency in exchange for a weak dollar might, in
  alternative circumstances, prove detrimental to
  the exporter.5. Collecting long-standing
  payments and debts can prove difficult.

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Advantages of Exporting

• 1. Increased market size and brand (global
  brand) awareness 2. Currency benefits -Changes
  in exchange rates can prove advantageous when
  selling to a customer whose currency is stronger
  than your own.3. Protection against a downturn
  in the domestic market.
• 4. Protection in the event of world recession -
  it is unlikely that all countries will be equally
  affected by an economic downturn. 5. Economies
  of scale from manufacturing in larger batches.

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Types of Export Businesses

• Export-Manufacturers
• Manufacturers, producers, assemblers and
  processors who export their own goods.
• Export-Traders
• Export Management Company
• Typically involved in the whole international
  trade process, including sales, marketing,
  invoicing, shipping, foreign receivable risks,
  customer training and support and even warranty
  issues. Often the arrangement is on an exclusive
  basis. A particular EMC will likely focus on
  specific industries and regions of the world.
  Most common way of indirect exporting
• Export Trading Company
• Similar to EMCsdistinction often lies in the
  size of the company. ETCs are large and more
  like to represent competing products.
• Export Commission Agents and Brokers
• Basic difference between an agent or broker and
  EMCs and ETCs is that agents typically dont
  fulfill the order they simply pass it on to the
  manufacturer. They act as sales reps but dont
  invoice the customer or coordinate the logistics.

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Export Management Company EMC

• EMC - Companies which act as your export
  department
• Market research
• Travel overseas to examine markets and visit
  clients
• Appoint overseas distributors
• Exhibit at international trade shows
• Handle shipping, export documentation, shipping,
  insurance, financing...

9
Export Management Company

• May or may not take title
• Commissions range from 7.5 - 20 percent
• May require 3-5 year contract
• Source Dept. of Commerce or Supt. Of Documents,
  U.S. Govt. Office, Washington, D.C. 20402

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Is Exporting the Business for You?

• Contacts (Buyers)
• Business Know How/Sales Experience
• Capital to Invest
• Attention to detail
• International Economics and Product Knowledge
• Foreign Languages Foreign Culturer
• Persistence, tempered by Judgment

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To Be Successful

• You must have at least one of the following
• Foreign Buyer that needs a U.S.
  Agent/Product/Service
• Domestic Product/Service/Company that is viable
  for international Sales
• Niche/Knowledge/ Advantage in a Particular
  Industry or Market

12
Failures
Many fail. For example, story of an insurance
salesman from South Dakota who abandoned his
insurance business for the pot of gold. He
incorporated himself as an ETC, packed his bag
for a four-day stay, and took off for Hong Kong,
expecting to land several orders for whatever
anyone wanted to buy. On the flight over, his
seat partner asked what product lines he
represented. His response typified the naivete
of the new traders. Any product you want. Im
going to get the order first and then source out
a supplier back in the States.
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Setting Up the Business involves

• Legal organization
• Name Logo
• Bank accounts insurance
• Office, Computer other equipment
• Accounting taxes
• Finance
• Loans or investors
• Personal Financial goals
• BUSINESS PLAN

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Two Key Decisions Before Going Globalif you are
manufacturer

• Should you enter foreign market directly or
  indirectly?
• Should you adapt your product and if so, how much?

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Two Key Decisions Before Going Globalif you are
export trading company

• Which manufacturer should you represent?
• In which market(s) should you sell the product?

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Do You Have what It takes to Become an Exporter?
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Important Entrepreneurial Qualities

• Drive (1-6) - Responsibility, vigor, initiative
  and perseverance.
• Patience (7) - Essential to coping with delays,
  strikes, revolutions.
• Tact (8) - Necessary to deal with people whom you
  may never meet and represent different cultures
• Imagination (9) - Necessary to adapt product
  selling approach in changing environment