Consider Six Essential Factors Before Expanding Globally

For many companies, expanding globally is essential to achieve success in the 21st century. But determining the best strategy can be difficult. And depending on your goals and level of resources, it may change.

However, by establishing a set of guidelines, selecting the right export markets doesn’t have to be painful. To make your job easier, consider some of our guidelines below.

Study Economic Indicators

Rank your potential country markets by how much of your product they import from the U.S. Then rank each by their total demand (domestic production plus world imports) for the previous three years. From this you can determine market size, its rate of growth, and U.S. market share.

If total demand for your product is increasing, review the country’s growth rate and per capita income. If indicators are positive, it’s likely that demand will continue to rise.

Be Competitive and Adapt

Identify each selected market’s trade barriers. If excessive, they may out-price your product. Know your competitors, their products, prices, distribution methods, consumers, and after-sale service. If intense competition exists, consider smaller markets that may be unattractive for multinationals, but big enough for you.

Sensitivity to foreign cultures is not only polite — it’s good business. Study a culture’s wants and needs. If your product design is not suitable, adapt.

Know Your Risks

Importers with soft currencies or insufficient reserves may find it difficult to pay you. Understand the risks, buy insurance or choose other markets. If you accept foreign currency, guard against fluctuations. Keep abreast of political risk. Civil unrest or policy changes may harm your interests.

Investigate Infrastructure Needs

If your product requires a skilled support staff, make sure it’s available in your target market. If not, you may be forced to provide costly support from back home. The lack of physical infrastructure may also curtail exports. The inability to quickly deliver perishables due to inoperable roads or inaccessibility to refrigerated storage can be a deterrent.

Research Legal Issues

Many countries claim to enforce intellectual property laws, but don’t. Investigate how piracy is handled. If protection isn’t a priority, you may want to avoid this market.

In some countries, the accused is presumed guilty until proven innocent, and judges may unfairly favor domestic sales agents or consumers. Assess each country’s legal practices and investigate safety and environmental regulations.

Welcome Advice and Use It

By acquiring majority interest in a foreign firm, you can dictate policy — but don’t. Respect and value the input provided by existing managers. A sound acquisition strategy asks what management thinks of proposed changes and incorporates the input.

Accurately Weigh Your Own Factors

Do your homework. Establish the factors you feel will best help you determine the markets to pursue — and seriously weigh them. Success is best achieved if you calculate all the costs of doing business and understand the ramifications of each decision. If not, your efforts may turn into losses.

About The Author John Manzella [Full Bio]

John Manzella, founder of the Manzella Report, is a world-recognized speaker, author of several books, and an international columnist on global business, trade policy, labor, and the latest economic trends. His valuable insight, analysis and strategic direction have been vital to many of the world's largest corporations, associations and universities preparing for the business, economic and political challenges ahead.




More Articles | Speaker Programs | Speaker Demo | Videos | Services