Doing Business Internationally BBI2O

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

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

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

Potential Problems Cost Cost Standards Standards Logistics/Infrastructure Logistics/Infrastructure Cultural barriers Cultural barriers

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

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

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

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

Cultural Issues A business must be very careful about the words and images it uses in its marketing A business must be very careful about the words and images it uses in its marketing May inadvertently offend people or even break local lawsMay 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.) 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? Pros and Cons of competing internationally? What are the 4 categories of errors a business can make when entering a foreign market? What are the 4 categories of errors a business can make when entering a foreign market? Examples of extra costs associated with international business Examples of extra costs associated with international business What does “infrastructure” mean? What does “infrastructure” mean? Why would a local translator be more useful than a translator you bring with you from your home country? Why would a local translator be more useful than a translator you bring with you from your home country?

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