Global Aspects of Entrepreneurship National borders are no longer defensible against the invasion of knowledge, ideas, and financial data. -Walter Wriston The new electronic interdependence recreates the world in the image of a global village. -Marshall McLuhan

Why Go Global? Offset sales declines in the domestic market. Offset sales declines in the domestic market. Increase sales and profits. Increase sales and profits. Extend their products’ life cycle. Extend their products’ life cycle. Lower manufacturing costs. Lower manufacturing costs. Lower the cost of their products. Lower the cost of their products. Improve competitive position and enhance reputation. Improve competitive position and enhance reputation. Raise quality levels. Raise quality levels. Become more customer-oriented. Become more customer-oriented.

Why Go Global? (cont’d) Before venturing into the global marketplace, entrepreneurs should ask themselves six questions: 1. Is there a profitable market in which our firm has the potential to be successful over the long run? 2. Do we have and are willing to commit adequate resources of time, people, and capital to global campaign? 3. Are we considering going global for the right reasons? 4. Do we understand the cultural differences, history, economics, value systems, opportunities, and risks of conducting business in the country (or countries) we are considering? 5. Is there a viable exit strategy for our company if conditions change or the new venture is not successful? 6. Can we afford not to go global?

Strategies for Going Global Creating a presence on the web Creating a presence on the web Trade intermediaries Trade intermediaries Export management companies Export management companies Export trading companies Export trading companies Manufacturer’s export agents Manufacturer’s export agents Export merchants Export merchants Resident buying offices Resident buying offices Foreign distributors Foreign distributors The value of using trade intermediaries The value of using trade intermediaries Joint ventures Joint ventures

Strategies for Going Global (cont’d) International franchising International franchising 1. Identify the county or countries that are best suited to the franchiser’s business concept. 2. Generate leads for potential franchisees. 3. Select quality candidates. 4. Structure the franchise deal. Countertrading and bartering Countertrading and bartering Foreign licensing Foreign licensing

Strategies for Going Global (cont’d) Exporting Exporting Step 1: recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export. Step 1: recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export. Step 2: analyze your product or service. Step 2: analyze your product or service. Step 3: analyze your commitment. Step 3: analyze your commitment. Step 4: research markets and pick your target. Step 4: research markets and pick your target. Step 5: develop a distribution strategy. Step 5: develop a distribution strategy. Step 6: find your customer. Step 6: find your customer. Step 7: find financing. Step 7: find financing. Step 8: ship your goods. Step 8: ship your goods. Step 9: collect your money. Step 9: collect your money.

Strategies for Going Global (cont’d) Establishing international locations Establishing international locations Importing and outsourcing Importing and outsourcing Entrepreneurs who are considering importing goods and service or outsourcing their manufacturing to foreign countries should follow these steps: 1. Make sure that importing or outsourcing is right for your business. 2. Establish your target cost for your product. 3. Do your research before you leave home. 4. Be sensitive to cultural differences. 5. Do your groundwork. 6. Protect your company’s intellectual property. 7. Select a manufacturer. 8. Provide an exact model of the product you want manufactured. 9. Stay in constant contact with the manufacturer and try to build a long-term relationship.

Barriers to International Trade Domestic barriers Domestic barriers International barriers International barriers Tariff barriers Tariff barriers Nontariff barriers Nontariff barriers Quotas Quotas Embargoes Embargoes Dumping Dumping Political barriers Political barriers Business barriers Business barriers Cultural barriers Cultural barriers

National Trade Agreements The world trade organization (WTO) The world trade organization (WTO) NAFTA NAFTA Among NAFTA’s provisions are: Tariff reductions Tariff reductions Elimination of nontariff barriers Elimination of nontariff barriers Simplified border processing Simplified border processing Tougher health and safety standards Tougher health and safety standards Central america free trade agreement (CAFTA) Central america free trade agreement (CAFTA)

Conclusion Although there are no sure-fire rules for going global, small businesses that want to become successful international competitors should observe these guidelines: Make yourself at home in all three of the world’s key markets: North America, Europe, and Asia. Make yourself at home in all three of the world’s key markets: North America, Europe, and Asia. Appeal to the similarities within the various regions in which you operate but recognize the differences in their specific cultures. Appeal to the similarities within the various regions in which you operate but recognize the differences in their specific cultures. Develop new products for the world market. Develop new products for the world market. Familiarize yourself with foreign customs and languages; constantly scan, clip, and build a file on other cultures: their lifestyles, values, customs, and business practices. Familiarize yourself with foreign customs and languages; constantly scan, clip, and build a file on other cultures: their lifestyles, values, customs, and business practices.

Conclusion (cont’d) Learn to understand your customers from the perspective of their culture, not your own. Learn to understand your customers from the perspective of their culture, not your own. “Glocalize.” Make global decisions about products, markets, and management but allow local employees to make tactical decisions about packaging, advertising, and service. “Glocalize.” Make global decisions about products, markets, and management but allow local employees to make tactical decisions about packaging, advertising, and service. Recruit and retain multicultural workers who can give your company meaningful insight into the intricacies of global markets. Recruit and retain multicultural workers who can give your company meaningful insight into the intricacies of global markets. Train employees to think globally, send them on international trips, and equip them with state-of-the-art communications technology. Train employees to think globally, send them on international trips, and equip them with state-of-the-art communications technology. Hire local managers to staff foreign offices and branches. Hire local managers to staff foreign offices and branches. Do whatever seems best wherever it seems best, even if people at home lose jobs of responsibilities. Do whatever seems best wherever it seems best, even if people at home lose jobs of responsibilities. Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own. Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own.