strategies for international business
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STRATEGIES FOR INTERNATIONAL BUSINESS
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Consider American culture and the typical US citizen who: “begins breakfast with an orange from the eastern Mediterranean, a
cantaloupe from Persia, or perhaps a piece of African watermelon. After his fruit and first coffee, he goes on to waffles (cakes made by a Scandinavian technique from wheat domesticated in Asia Minor). Over these he pours maple syrup (invented by Native American of the Eastern U.S. woodlands). As a side dish he may have the eggs of a species of bird domesticated in Indo-China, or thin strips of the flesh of an animal domesticated in Eastern Asia which have been salted and smoked by a process developed in northern Europe. While smoking, he reads the news of the day, imprinted in characters invented by the ancient Semites upon a material invented in China by a process invented in Germany. As he absorbs the accounts of foreign troubles he will, if he is a good conservative citizen, thank a Hebrew deity in an Indo-European language that he is 100 percent American.”
FOOD FOR THOUGHT
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R. Linton, “The Study of Man” (1936)
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Take a World View
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Small and medium-sized enterprises account for the vast majority (99.87%) of Canadian
companies and employ over half (64%) of the labour force as of 2005.
But only 1.4% of small businesses export.
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How we view the World
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HOW THE WORLD VIEWS CANADA
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The Canadian Perspective
IT WILL DO
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The International Response
“NO IT WON’T”
A personal or Canadian best might not be good enough. “It starts with world-class products and services.” William Polushin, McGill University
Canadians are missing the boat. We haven’t moved fast enough and used the things we are really good at, like clean technology, water purification and green building.” Kathleen Slaughter Dean Hong Kong campus of the Richard Ivey School of Business
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BE COMPETITIVE
• If you have a so-so “me-too” generic product, inefficient production, poor reliability, no branding, selling the world will be heavy sledding
• In fact, the world might pay your competitors a visit…
• This is Canada: great education, banks, infrastructure
• So be the best, design for manufacture, tool up – if you design out 90% of the labour, eliminate rework, you can compete with low labour cost competitors, win the sales, increase your staff, and have great margins too. Really.
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BUILD UP
• Be brutally honest in your competitive position. • Focus on your competitive advantage, protect it and
build on it. • Build success at home before going abroad. • Focus on one international market introduction at a
time. • Use your networks in generating market intelligence
but understand their limitations. – Board of Directors – Scientific advisory – Industry associations – Foreign trade commissioners – Canadian consulates
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So - You will have to shape up…
• QMS ISO 9001
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SMALL BUSINESS
SUCCESS STORIES
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Why Export?
It’s a bunch of work:
• Languages – agents, brochures, web site,
• Time zones – Europe +9, Asia -9, Middle East 12!
• Brutal flights
• Cultural differences
• Competition
• Not everywhere is as nice, safe as Canada
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Because - Canada is a Limited Market…
Canada 2010 GDP $T 1.3 World 2010 GDP $T 74.0
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CANADIAN BUSINESS
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The Strategy of International Business
GETEPARED
1. Identify Potential Markets
2. Choose Best Markets for You
3. Can you Compete?
4. Determine Appropriate Entry Strategy
5. Marketing and Management
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A Cheap Peek
• Early on attend the likely trade shows of interest -> market and corporate intelligence -> benchmark your products.
• Coordinate with trade missions if there is a fit, but don’t rely on this for significant market development.
• Be frugal on travel but ambitious in your meetings.
• Assume a couple years between first contact in a new market and first sale – need staying power and patience.
• Budget for market development
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COUNTRY EVALUATION PEST
Criteria POLITICAL CHANGE
POLITICAL UNCERTAINTY
POLITICAL DOCTRINE
POLITICAL ECONOMIC Criteria
TAX SYSTEMS
INVESTMENT
CONSIDERATIONS
SOPHISTICATION OF
FINANCIAL MARKETS
COMMODITY PRICES
MONETARY AND FISCAL
POLICIES
GOVERNMENT AID
INTERNAL REGULATION
EXCHANGE RATES
RELIGIOUS
CONSIDERATIONS
IMPACT ON LOCAL
COMMUNITIES
AVAILABILITY OF JOBS,
ENVIRONMENTAL IMPACT
ETHICAL
CONSIDERATIONS
CULTURAL ISSUES
SOCIAL TECHNICAL ACCESS TO BANDWIDTH
PC OWNERSHIP
TECHNOLOGY
COMPATIBILITY
TECHNOLOGIES IN
BUSINESS MANAGEMENT
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IMPORTANT CONSIDERATIONS
• LEGAL SYSTEMS – COMMON
– CIVIL
– THEOCRATIC
• CULTURE – HOFSTEDE – Cultural Universals
– HALL – High and Low Communication Contexts
• ETHICS – DIFFERENT RULES
– LEGALLY AND CULTURALLY BASED
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COMPANY ANALYSIS
SWOT S= Strengths
Internal
W= Weaknesses
O= Opportunities
External
T= Threats
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COMPETITIVE ANALYSIS
Functions Performance Rating vs. Competition
Weak Strong
Marketing Company Reputation
Marketing
Manufacturing Costs
Distribution Costs
Geographic Coverage
Finance Cost of Capital
Financial Stability
Profitability
Manufacturing Economies of Scale
Facilities
Manufacturing Capability
Organization Leadership
Labour Force
Orientation-entrepreneurial
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MARKET ENTRY
DETERMINED BY
• WHICH MARKETS TO ENTER
• WHEN TO ENTER THESE MARKETS
• SCALE OF ENTRY
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MARKET ENTRY STRATEGIES
EXPORTING
TURNKEY PROJECTS
LICENSING
FRANCHISING
JOINT VENTURES
FOREIGN DIRECT INVESTMENT
PIGGYBACKING
AGENT
DISTRIBUTOR
MARKETING
MANUFACTURING
CULTURALLY BASED
REQUIRES STRONG BRAND
1 + 1 = 3
BECOME LOCAL COMPANY
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MARKETING STRATEGY ISSUES
PRICE PRICE DISCRIMINATION STRATEGIC PRICING REGULATORY PRICING
PROMOTION
CULTURAL DIFFERENCES AVAILABILITY OF MEDIA
PRODUCT
CULTURAL DIFFERENCES ECONOMIC DEVELOPMENT PRODUCT AND TECHNICAL STANDARDS
PLACE
LENGTH / WIDTH OF DISTRIBUTION CHANNELS DEGREE OF MARKET CONCENTRATION
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MARKETS WITH POTENTIAL
SOUTH EAST ASIA
LATIN AND SOUTH AMERICA
EASTERN EUROPE
DUBAI AND REGION
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Growth Rates
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WHAT ABOUT CHINA AND INDIA?
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POTENTIAL EXPORTS
• Medical & Dental Equipment, • Wastewater Treatment Equipment & Chemicals, • Oil & Gas Production & Exploration Equipment, • Food and Agribusiness • Infrastructure Development • Heavy Construction Equipment, • Advanced Manufacturing • Financial Services • Digital Media and Software • Aerospace and Aviation • Electrical Power Generation & Transmission Equipment, • Prefabricated Housing and other Building Products • Education • Life Sciences • Energy and Energy Technologies • Environmental Products and Services • Retail and Franchising
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INNOVATIVE MARKETING STRATEGIES
INNOVATION SHOULD BE THE CORE OF YOUR STRATEGY
MARKETING SHOULD BE YOUR DRIVING FORCE
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SELL THE MARKET WHAT IT WANTS
PROCESS
DELIVERED IN IRAN
RESIDENCIES AND ON-LINE
QUALITY CONTROL
MARKET DRIVEN PRICING
PARTNERSHIP
RESULTS
YEAR 1 – 34 MBA STUDENTS
YEAR 2 – 46 MBA STUDENTS
MARKET PENETRATION
ENHANCED REPUTATION
YOU CAN GET THERE FROM HERE
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MARKET THE FUTURE
PROCESS
FROM R&D TO MARKETING FOCUS
MARKET DRIVEN PRODUCT DEVELOPMENT
RESULTS
MULTIPLE INTERNATIONAL MARKETS AND SECTORS
“GREEN" TECHNOLOGY LEADER
AVERAGE ANNUAL GROWTH RATE OF 68%
CHANGING THE WAY THE WORLD THINKS ABOUT LIGHTING
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MARKET A REVENUE MODEL
PROCESS IDENTIFIED A NICHE DEVELOPED USER FRIENDLY
SOFTWARE BUILT ALLIANCES RESULTS WORLD’S LARGEST ON-LINE
MARKETPLACE FOR BOOKS 70 MILLION BOOKS OFFERED 13,000 BOOKSELLERS IN 48
COUNTRIES
BECAUSE YOU READ
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MARKET YOUR PASSION
PROCESS DEVELOPED A REALISTIC MISSION BUILT TECHNOLOGY THAT WORKED IDENTIFIED MARKETS THAT
UNDERSTOOD THE MISSION PROVIDE STRONG AFTER SALES
SERVICE RESULTS VARIED PRODUCT PORTFOLIO BUILT
AROUND THEIR MISSION MULTIPLE MARKETS 2004 BC EXPORT AWARD EMPOWERING LEARNING THROUGH TECHNOLOGY
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USE THE WEB
• Information
• Research
• Cultural Intelligence
• Networks
• Contacts
• Partners
• Marketing
• Customers
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TRADITIONAL MEDIA
ON-LINE
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Professional Networks and Blog Platforms
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BUSINESS NETWORKS
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SOCIAL NETWORKING
EUROPE
WORLD
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KEY SUCCESS FACTORS
• Marketing research quality
• Local partnerships
• Product adaptation
• Recognise differences between each country in a region
• Who you know
• Be customer driven
• Understand the cultures
• Take a long-term view of market
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FOOD FOR THOUGHT
• Research. Plan. Implement! • Get Connected. • Pick on someone your own size. • Find and develop a partner. • It's better to succeed in two markets than to fail in 10. • Don't be arrogant. • Adjust your attitude when you go overseas; don't
assume your reputation precedes you. • Think guerrilla. Strategize accordingly. • Be selective. Select the partner and market, not the
reverse. • Change your mind-set. Think market, not geography. • Resist the familiar. Be conscious of your biases, • Learn foreign countries' perceptions of "fair play."
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Every morning in Africa, a gazelle wakes up.
It knows it must run faster than the fastest lion or it will
be killed.
Every morning a lion wakes up.
It knows it must outrun the slowest gazelle or it will
starve to death.
It doesn’t matter whether your are a lion or a gazelle.
When the sun comes up, you better start running.
- African Proverb
Source: Friedman, Thomas L. The World is Flat
A FINAL THOUGHT
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RESOURCES
https://trade.britishcolumbia.ca/Buy/BCBusinessNetwork
http://www.fitt.ca
http://www.tradecommissioner.gc.ca
http://www.gov.bc.ca/tti
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THANK YOU