l 10-global opportunities for entrepreneur

8/3/2019 L 10-Global Opportunities for Entrepreneur

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Chapter 14: Global AspectsChapter 14: Global Aspects 11Copyright 2005 Prentice Hall Inc. A Pearson Education CompanyCopyright 2005 Prentice Hall Inc. A Pearson Education Company

GLOBAL ASPECTS OFGLOBAL ASPECTS OFENTREPRENEURSHIPENTREPRENEURSHIP

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BLHC 4042ENTREPRENEUSHIP SKILLS AND NEW BUSINESS

LECTURE 10LECTURE 10


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Why Go Global?Why Go Global? Offset sales declines in the domestic marketOffset sales declines in the domestic market

Increase sales and profitsIncrease sales and profits Extend products life cyclesExtend products life cycles

Lower manufacturing costsLower manufacturing costs

Improve competitive positionImprove competitive position Raise quality levelsRaise quality levels

Become more customerBecome more customer--orientedoriented

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Strategies For Going GlobalStrategies For Going Global

Launching a World Wide Web siteLaunching a World Wide Web site

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North America31.3%

Europe28.9%

Asia/Pacific Rim

31.6%

Latin America

5.3% Other Regions3.0%

Internet Users Worldwide by Region

Source: Un ited Nations Conference on Trade Development, E-Commerce and Development Report 2002, p. 8.

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ThreeThree--Step Evolutionary ApproachStep Evolutionary Approach

1.1. Connecting to eConnecting to e--mailmail2.2. Using the Web toUsing the Web to

conduct internationalconduct international

market researchmarket research3.3. Building a globallyBuilding a globally--

accessible Web siteaccessible Web site

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Launching a World Wide Web siteLaunching a World Wide Web site Relying on trade intermediariesRelying on trade intermediaries

Strategies For Going GlobalStrategies For Going Global

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Trade IntermediariesTrade Intermediaries

Export Management Companies (EMCs)Export Management Companies (EMCs)

Export Trading Companies (ETCs)Export Trading Companies (ETCs)

Manufacturers Export Agents (MEAs)Manufacturers Export Agents (MEAs)

Export merchantsExport merchants

Resident buying officesResident buying offices

Foreign distributorsForeign distributors

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Strategies For "GoingStrategies For "GoingGlobal"Global"

Joint venturesJoint ventures


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Joint VenturesJoint Ventures

Domestic joint ventureDomestic joint venture two or more U.S.two or more U.S.

companies form an alliance for the purpose ofcompanies form an alliance for the purpose ofexporting their goods and services abroad.exporting their goods and services abroad.

Foreign joint ventureForeign joint venture a domestic firm formsa domestic firm forms

an alliance with a company in the targetan alliance with a company in the targetnation.nation. Most foreign joint ventures fail; average successMost foreign joint ventures fail; average success

rate is just 43%.rate is just 43%.

Most important ingredient: choosing the rightMost important ingredient: choosing the rightpartner.partner.

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Strategies For "Going Global"Strategies For "Going Global"

Foreign licensingForeign licensing International franchisingInternational franchising

Countertrading and barteringCountertrading and bartering

ExportingExporting



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ExportingExporting Small companies account for 97% of allSmall companies account for 97% of all

companies involved in exporting, but theycompanies involved in exporting, but theygenerate just 31% of the dollar value ofgenerate just 31% of the dollar value of

the nations exports.the nations exports.

Only 1% of all small and mediumOnly 1% of all small and medium--sizedsizedbusinesses export.businesses export.

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Source: Exporter Data Base, U.S. Dept of Commerce, Office of Trade and

Economic Analysis, Trade Development/International Trade Agency.

Number of Countries to Which Small Businesses Export

2 to 4 countries

23.7%

5 to 9 countries

7.7%

10 or more

countries5.6%

1 country

63.0%

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Steps to Successful ExportingSteps to Successful Exporting

1. Recognize that even the tiniest companies1. Recognize that even the tiniest companies

and least experienced entrepreneurs haveand least experienced entrepreneurs havethe potential to export.the potential to export.

2. Analyze your product or service.2. Analyze your product or service.

3. Analyze your commitment to developing3. Analyze your commitment to developing

export markets.export markets.

4. Research potential markets and pick your4. Research potential markets and pick yourtarget.target.

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Steps to Successful ExportingSteps to Successful Exporting

5. Develop a distribution strategy.5. Develop a distribution strategy.6. Find your customer.6. Find your customer.

U.S. Department of CommerceU.S. Department of Commerce

International Trade AdministrationInternational Trade Administration

7. Find financing for export sales.7. Find financing for export sales.

8. Ship your goods.8. Ship your goods.9. Collect your money.9. Collect your money.

(continued)(continued)

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How a Letter of Credit Works:How a Letter of Credit Works:

$

Foreign buyer agrees to buy products;

seller agrees to ship goods if buyer

arranges a letter of credit.

Buyer requests that his bank grant a

letter of credit, which assures exporter

payment if she presents documents

proving goods were actually shipped.

Bank makes out letter of credit to seller

and sends it to sellers bank (called theconfirming bank).

Seller ships goods to buyer

according to letter of credits

terms and submits shippingdocuments to bank issuing

letter of credit.

$Letter

of Credit

Sellers Bank Buyer's Bank

Buyers bank makes payment

to sellers (confirming) bank.

Confirming bank then pays

seller amount specified in

letter of credit.

$

BuyerSeller

$

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Strategies For "Going Global"Strategies For "Going Global"

Establishing international locationsEstablishing international locations

Launching a World Wide Web siteLaunching a World Wide Web site

Relying on trade intermediariesRelying on trade intermediaries


Foreign licensingForeign licensing

International franchisingInternational franchising

Countertrading and barteringCountertrading and bartering

ExportingExporting

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Barriers To International TradeBarriers To International Trade

AttitudeAttitude My company is too small toMy company is too small to

export.export.

Lack of information about how to getLack of information about how to getstarted.started.

Lack of export financing.Lack of export financing.

Domestic BarriersDomestic Barriers::

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Barriers To International TradeBarriers To International Trade(continued)(continued)

TariffsTariffs -- taxes a government imposes on goodstaxes a government imposes on goods

and services imported into that country.and services imported into that country.

QuotasQuotas -- limits on the amount of a productlimits on the amount of a product

imported into a country.imported into a country.

EmbargoesEmbargoes -- total bans on imports of certaintotal bans on imports of certainproducts.products.

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Barriers To International TradeBarriers To International Trade(continued)(continued)

DumpingDumping -- Selling large quantities of aSelling large quantities of a

product in a foreign country below cost toproduct in a foreign country below cost togain market share.gain market share.

Political barriersPolitical barriers -- rules, regulations andrules, regulations and

risks.risks. Cultural barriersCultural barriers -- Differing languages,Differing languages,

philosophies, traditions, and acceptedphilosophies, traditions, and accepted

business practices.business practices.

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International Trade AgreementsInternational Trade Agreements

Major Agreements:Major Agreements: General Agreement on Tariffs and TradeGeneral Agreement on Tariffs and Trade

(GATT)(GATT)

World Trade Organization (WTO)World Trade Organization (WTO)

North American Free Trade AgreementNorth American Free Trade Agreement

(NAFTA)(NAFTA)

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Guidelines For Success InGuidelines For Success InInternational MarketsInternational Markets

Make yourself at home in all three of the worlds keyMake yourself at home in all three of the worlds keymarketsmarkets -- North America, Europe, and Asia.North America, Europe, and Asia.

Develop new products for the world market.Develop new products for the world market.

Familiarize yourself with foreign customs andFamiliarize yourself with foreign customs and

languages.languages.

GlocalizeGlocalize -- make global decisions about products,make global decisions about products,markets, and management, but allow local employeesmarkets, and management, but allow local employees

to make tactical decisions about packaging,to make tactical decisions about packaging,advertising, and service.advertising, and service.

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Guidelines For Success InGuidelines For Success In

International MarketsInternational Markets(continued)(continued)

Train employees to think globally, send them onTrain employees to think globally, send them oninternational trips, and equip them with stateinternational trips, and equip them with state--ofof--thethe--art communication technology.art communication technology.

Hire local managers to staff foreign offices andHire local managers to staff foreign offices and

branches.branches. Do whatever seems best wherever it seems best, evenDo whatever seems best wherever it seems best, even

if people at home lose jobs or responsibilities.if people at home lose jobs or responsibilities.

Consider using partners and joint ventures to breakConsider using partners and joint ventures to breakinto foreign markets you cannot penetrate on yourinto foreign markets you cannot penetrate on yourown.own.

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l 10-global opportunities for entrepreneur

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