Doing Business Internationally BBI2O

Why go international? Find new customers Partner with new suppliers Products you can’t get domestically Higher quality products than you can get domestically Lower costs Stay ahead of competitors

The downside of going international New competition Foreign competitors expanding into your home country When you enter foreign markets you compete against the “home team”

The Big Question Will anyone buy my product? Can they afford it? Is there demand for it? If not, will you be able to create a demand? Is there existing competition? Can you legally sell your product there? Will you be able to earn a profit?

Potential Problems Cost Standards Logistics/Infrastructure Cultural barriers

Costs Tariffs Exchange rates Transportation costs “Hidden” costs Unstable currencies can wipe out profit margin Transportation costs “Hidden” costs Translation, legal costs, insurance, local taxes, bribes

Standards Different countries have different standards Examples: What side of the road do you drive on? Is it 0 degrees, or 35 degrees? Is it 29 kilometres into Ottawa, or 18 miles? Units of measure, voltages, video standards all can differ from country to country You must make sure your product meets each countries standards

Logistics and Infrastructure How will you transport your product? Does the destination country have shipping ports, airports, well maintained roads, rail system? How will you communicate? Phone, internet, wireless, radio, etc. Other considerations Hospitals, police and fire departments, education systems, banks

Cultural Issues Example: Wild Jack’s Snacks is the best selling beef jerky in Canada. India has over 1.1 billion people, so would be a very attractive market Any problems?

Cultural Issues A business must be very careful about the words and images it uses in its marketing May inadvertently offend people or even break local laws Must not only be aware of language, but also culture and customs (slang, hand gestures, significance of colours, gift giving practices, punctuality, dress code, etc.)

Review Pros and Cons of competing internationally? What are the 4 categories of errors a business can make when entering a foreign market? Examples of extra costs associated with international business What does “infrastructure” mean? Why would a local translator be more useful than a translator you bring with you from your home country?

Textbook work Read page 505-508 in the textbook Answer questions on p. 511 1b) 2a), b) and c)