STRATEGIES FOR INTERNATIONAL BUSINESS

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

R. Linton, “The Study of Man” (1936)

Take a World View

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.

How we view the World

7

HOW THE WORLD VIEWS CANADA

The Canadian Perspective

IT WILL DO

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

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.

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

So - You will have to shape up…

• QMS ISO 9001

SMALL BUSINESS

SUCCESS STORIES

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

Because - Canada is a Limited Market…

Canada 2010 GDP $T 1.3 World 2010 GDP $T 74.0

CANADIAN BUSINESS

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

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

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

IMPORTANT CONSIDERATIONS

• LEGAL SYSTEMS – COMMON

– CIVIL

– THEOCRATIC

• CULTURE – HOFSTEDE – Cultural Universals

– HALL – High and Low Communication Contexts

• ETHICS – DIFFERENT RULES

– LEGALLY AND CULTURALLY BASED

COMPANY ANALYSIS

SWOT S= Strengths

Internal

W= Weaknesses

O= Opportunities

External

T= Threats

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

21

MARKET ENTRY

DETERMINED BY

• WHICH MARKETS TO ENTER

• WHEN TO ENTER THESE MARKETS

• SCALE OF ENTRY

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

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

MARKETS WITH POTENTIAL

SOUTH EAST ASIA

LATIN AND SOUTH AMERICA

EASTERN EUROPE

DUBAI AND REGION

Growth Rates

WHAT ABOUT CHINA AND INDIA?

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

INNOVATIVE MARKETING STRATEGIES

INNOVATION SHOULD BE THE CORE OF YOUR STRATEGY

MARKETING SHOULD BE YOUR DRIVING FORCE

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

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

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

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

USE THE WEB

• Information

• Research

• Cultural Intelligence

• Networks

• Contacts

• Partners

• Marketing

• Customers

TRADITIONAL MEDIA

ON-LINE

Professional Networks and Blog Platforms

BUSINESS NETWORKS

SOCIAL NETWORKING

EUROPE

WORLD

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

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."

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

RESOURCES

https://trade.britishcolumbia.ca/Buy/BCBusinessNetwork

http://www.fitt.ca

http://www.tradecommissioner.gc.ca

http://www.gov.bc.ca/tti

THANK YOU