International Expansion for Small/Medium Sized Companies Spring 2014 Conference

International Expansion Throughout this module the term “product” generally applies to services as well as goods Importing principles and concepts are generally the reverse of exporting methods noted in this module Reference is made to “organizations” rather than companies as NGOs, non-profit and government entities are also exporters and importers

International Expansion Exporting existing products or services to “new” markets or importing “new” products or services to existing markets are major methods expanding an organization’s business Success in the domestic (or “home”) market “spills over” to international expansion b y stimulating interest of exporters/importers seeking opportunities

International Expansion This “spill over” is due to the global visibility of websites, trade shows, advertising, and other promotional activities First time exporter/importers typically want to exploit these opportunities – this is a “passive” market entry mode Often the product may be sold “as is” - without modification from the home market version

Product-Market Growth Matrix

International Expansion Selling “as is” internationally is a classic way to profitably use excess capacity Eventually, the market may require product modification to meet local requirements: product attributes (sizes, measures), packaging, regulatory approvals, market preferences, competitive offerings

International Expansion Finally, the international business becomes significant and may require a product designed specifically for the market This “active” international expansion requires a comprehensive plan Successful entrepreneurs may have the “plan” imbedded in their brain For the rest of us a comprehensive plan to allocate resources is vital (even for a passive market entry mode)

“If you don’t know where you are going, any road will take you there”

Start with a plan Make a 3-5 year forecast/sales and profit goals: How much from existing markets and products? How much from new products for existing markets? How much from “new” markets – this typically makes you look at exporting

Why Export?  Exports can: - produce profitable sales - spread fixed costs - gain market advantages - improve internal controls and management - enhance access to funding

International Expansion SWOT - a strategic analysis is a useful tool to start an international expansion plan process: Strengths and Weaknesses are the organization’s internal capabilities and limitations Opportunities and Threats are in the international business environment and need to be evaluated to assess market potential

Environmental Scanning The process of continually acquiring information on events* occurring outside the organization to identify and interpret potential trends is called environmental scanning * Events beyond management control - OT

Environmental forces affecting the organization, as well as its suppliers and customers

Start with a plan  Export plan: what needs does product/service meet? how big is the market? how do you know this?

How to Export? Export readiness: Top management commitment Adequate resources: management financial production capacity

Get Resources  Who is in charge?  How are you going to measure performance against the plan?  What resources are required: People Cash

Start with a plan How do you find this stuff out? Analyze home market and question what you know about the home market Contact USEAC product specialist Use “slave labor”* to conduct investigations of the stuff you need to know * Local college students