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    which option should you use to expand internationally


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    Exporting is a typically the easiest way to enter an international market, and therefore most firms begin their international expansion using this model of entry. Exporting is the sale of products and services in foreign countries that are sourced from the home country. The advantage of this mode of entry is that firms avoid the expense of establishing operations in the new country. Firms must, however, have a way to distribute and market their products in the new country, which they typically do through contractual agreements with a local company or distributor. When exporting, the firm must give thought to labeling, packaging, and pricing the offering appropriately for the market. In terms of marketing and promotion, the firm will need to let potential buyers know of its offerings, be it through advertising, trade shows, or a local sales force.

    Amusing Anecdotes

    One common factor in exporting is the need to translate something about a product or service into the language of the target country. This requirement may be driven by local regulations or by the company’s wish to market the product or service in a locally friendly fashion. While this may seem to be a simple task, it’s often a source of embarrassment for the company and humor for competitors. David Ricks’s book on international business blunders relates the following anecdote for US companies doing business in the neighboring French-speaking Canadian province of Quebec. A company boasted of lait frais usage, which translates to “used fresh milk,” when it meant to brag of lait frais employé, or “fresh milk used.” The “terrific” pens sold by another company were instead promoted as terrifiantes, or terrifying. In another example, a company intending to say that its appliance could use “any kind of electrical current,” actually stated that the appliance “wore out any kind of liquid.” And imagine how one company felt when its product to “reduce heartburn” was advertised as one that reduced “the warmth of heart”!David A. Ricks, Blunders in International Business (Hoboken, NJ: Wiley-Blackwell, 1999), 101.

    Among the disadvantages of exporting are the costs of transporting goods to the country, which can be high and can have a negative impact on the environment. In addition, some countries impose tariffs on incoming goods, which will impact the firm’s profits. In addition, firms that market and distribute products through a contractual agreement have less control over those operations and, naturally, must pay their distribution partner a fee for those services.

    Ethics in Action

    Companies are starting to consider the environmental impact of where they locate their manufacturing facilities. For example, Olam International, a cashew producer, originally shipped nuts grown in Africa to Asia for processing. Now, however, Olam has opened processing plants in Tanzania, Mozambique, and Nigeria. These locations are close to where the nuts are grown. The result? Olam has lowered its processing and shipping costs by 25 percent while greatly reducing carbon emissions.Michael E. Porter and Mark R. Kramer, “The Big Idea: Creating Shared Value,” Harvard Business Review, January–February 2011, accessed January 23, 2011, http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/pr.

    Likewise, when Walmart enters a new market, it seeks to source produce for its food sections from local farms that are near its warehouses. Walmart has learned that the savings it gets from lower transportation costs and the benefit of being able to restock in smaller quantities more than offset the lower prices it was getting from industrial farms located farther away. This practice is also a win-win for locals, who have the opportunity to sell to Walmart, which can increase their profits and let them grow and hire more people and pay better wages. This, in turn, helps all the businesses in the local community.Michael E. Porter and Mark R. Kramer, “The Big Idea: Creating Shared Value,” Harvard Business Review, January–February 2011, accessed January 23, 2011, http://hbr.org/2011/01/the-big-idea-creating-shared-value/ar/pr.

    Firms export mostly to countries that are close to their facilities because of the lower transportation costs and the often greater similarity between geographic neighbors. For example, Mexico accounts for 40 percent of the goods exported from Texas.Andrew J. Cassey, “Analyzing the Export Flow from Texas to Mexico,” StaffPAPERS: Federal Reserve Bank of Dallas, No. 11, October 2010, accessed February 14, 2011, http://www.dallasfed.org/research/staff/2010/staff1003.pdf. The Internet has also made exporting easier. Even small firms can access critical information about foreign markets, examine a target market, research the competition, and create lists of potential customers. Even applying for export and import licenses is becoming easier as more governments use the Internet to facilitate these processes.

    Because the cost of exporting is lower than that of the other entry modes, entrepreneurs and small businesses are most likely to use exporting as a way to get their products into markets around the globe. Even with exporting, firms still face the challenges of currency exchange rates. While larger firms have specialists that manage the exchange rates, small businesses rarely have this expertise. One factor that has helped reduce the number of currencies that firms must deal with was the formation of the European Union (EU) and the move to a single currency, the euro, for the first time. As of 2011, seventeen of the twenty-seven EU members use the euro, giving businesses access to 331 million people with that single currency.“The Euro,” European Commission, accessed February 11, 2011, http://ec.europa.eu/euro/index_en.html.

    Source : saylordotorg.github.io

    Which Option Should You Use To Expand Internationally

    Let's discuss the answer to which option should you use to expand internationally in this article. Keep reading.

    Which Option Should You Use To Expand Internationally

    Nikita Mittal •8 min read Share on linkedin Share on facebook Share on twitter Share on whatsapp Share on email

    Are you wondering which option should you use to expand internationally? Read this to find out.

    It can be very daunting for businesses to expand beyond their geographical confine. You’ve done what you can at this stage, and you want to take on the world. The pressure increases as your business become more and more complex and risky. Whether you’re expanding to just one country, a different region, or several countries, navigating the way forward can be very intimidating.

    It is natural for an entrepreneur with little to no knowledge of the international market to have many questions. They might not know where or how to start with their planning. You must consider several different aspects and factors if you want to do well when you expand internationally.

    Along with a comprehensive business plan that will guide your path towards world domination, it is also crucial to do extensive research on each country or region you’re planning to expand to. Aspects like international competition, language barriers, cultural barriers, etc., all need to be adequately addressed. This will ensure that you don’t end up in a mess. Let’s discuss the answer to which option should you use to expand internationally in this article. Keep reading.

    Why Should You Expand Business Internationally?

    Entrepreneurs who want to take their business to the next level have found that expanding abroad has become the most practically expansion project. There was a time when the ‘global expansion goal’ was the end game, which was only possible for big companies. Now, with globalization, the international market is accessible for small businesses as well. With the right resources, anyone can run a successful international business.

    Many people fail to reach their aim because they are unprepared for the difficulties that may arise. Internalization advantages are worth it in the short and long term, even if it takes some time and work. This article shows the benefits of global growth and explains why organizations want to expand internationally. Despite the challenges that this process may entail.

    International Expansion For Increase In Revenue

    One of the main benefits of globalization is connecting with every nook and corner of the world if one wishes to. By marketing your product in several different countries, you have access to a huge number of potential clients. This increases revenue.

    Global expansion = business growth.

    This is not limited to the average income the market you are already established in can offer your company.

    International Expansion For Increase In Savings

    Along with more profit prospects, expanding your business globally also allows for lower expenses. Doing business overseas is usually less expensive since you may cut manufacturing expenses in more economic countries. Differences in minimum wages across the world may also be an area you could cut costs. One of the reasons Apple outsources its manufacturing processes to China, for example, is to save money on labor.

    The international expansion gives you a more extensive customer base, i.e., more growth opportunities.

    The words “international expansion” conjure up images of growth and reinvention. In most cases, a product or a handy service that works well in one market will not necessarily work well in another. Some modifications must be made to meet the demands of your new consumer base. These significant changes will almost certainly raise the possibilities of your present product’s growth and development. This will further allow you to invest in and introduce other items or services.

    An International Company Has Greater Reputation And Prestige

    A solid reputation is essential for every organization since it validates its dependability and creates an appealing brand. Because of the increased prestige that comes with becoming global, international growth is the stamp of approval that demonstrates that your company and product are successful, credible, and of high quality. Because international expansion is a difficult process, if you succeed in establishing global collaboration, your brand becomes known worldwide.

    Going International Gives You A Competitive Edge

    Companies are compelled to use every edge they have to stay relevant in today’s competitive market, especially in this fast-paced age of innovation as we see in the 21st century. Globalization is the competitive advantage your firm needs to leapfrog your competition in a new marketing arena where competitors have yet to venture. Aside from providing your firm with a name and prestige, globalization also provides you with access to new technologies and industry ecosystems that you can leverage against competitors.

    Expanding your business internationally can be a huge challenge. The best way to increase your chances of success is to be as prepared as possible. If you don’t plan and organize your expansion strategy well, your business could lose hundreds of thousands of dollars in an instant. Your brand could also suffer damage to the point that all future expansion plans become even riskier.

    Source : www.scaling.partners

    6 Crucial Steps for Creating Your Global Expansion Strategy

    Taking your business global has many advantages, but doing so without a solid global expansion strategy can set you up for failure. Read our global expansion strategy top tips and best practices to discover how planning ahead can help your business thrive in lucrative new markets.

    Resources ARTICLES

    6 Crucial Steps for Creating Your Global Expansion Strategy

    Taking your business global has many advantages, but doing so without a solid global expansion strategy can set you up for failure. Read our global expansion strategy top tips and best practices to discover how planning ahead can help your business thrive in lucrative new markets.

    Uriel Eldan・October 20, 2021・9 mins read

    Global expansion is undoubtedly one of the best ways to tap into new markets, acquire world-class experts, and set your company up for long-term success. But without a solid strategy, global expansion is near-impossible and can result in delays, extra costs, and wasted resources.

    This guide will give you a clear understanding of what a global expansion strategy is and how your business can formulate its own plan successfully. You’ll learn the best practices for planning market expansion step by step, from the consideration phase to launch.

    Why You Need a Global Expansion Strategy

    Having a considered business expansion strategy in place will help you to:

    Expand into the right markets at the right time

    Use time and money efficiently

    Mitigate risk and stay compliant with local regulations

    Build a competition-crushing team

    Scale your business faster

    Increase profitability

    What Is a Global Expansion Strategy?

    A global expansion strategy is a formal business plan that outlines how a company intends to expand its operations into foreign countries and markets, while mitigating risks and enhancing revenue growth. To be successful, it should include clear timelines and budgets, thorough research, realistic goals, and dedicated talent.

    Your international market expansion strategy should aim to give clear structure and guidance to those in charge of executing it, thus making it a crucial part of your overall global expansion process.

    How to Create a Successful Global Expansion Strategy

    Creating a robust global expansion strategy is a big task; it requires enough time, dedication, and resources. But it’s not an impossible feat, and when done right, your global expansion plan will make scaling your business far easier and more successful in the long run.

    To help you hit the ground running, we’ve broken down the global expansion strategy process into six simple steps.

    1. Set Company Goals to Guide Your International Business Strategies

    Before you jump into any business expansion, whether it’s local or global, you first need to set clear company goals. This will give you and your teams direction and purpose for the short, mid, and long term, driving the business forward sustainably.

    Setting company-wide goals will help you to understand where global expansion fits into your company vision and which goals it can help you achieve. It’ll also help you prioritize certain aspects of global expansion, set aside an appropriate budget, and give you a clearer timeframe for when you need to achieve each step in the expansion process.

    When setting goals, consider what the main aim(s) of your global expansion should be. For example, your global expansion plans may be led by factors such as:

    Widening your talent pool to build a diverse team and source niche skills

    Expanding your business into lucrative new markets

    Proving economic stability for your business by diversifying markets

    Saving money by moving operations abroad

    Building a globally recognized brand or improving your existing reputation

    Each of these potential drivers for global expansion will result in very different goals that you would need to set and plan.

    To help you set achievable company goals, there are many frameworks you can use, such as OKRs (Objectives & Key Results) or WIGs (Widely Important Goals). But whichever framework you use, your goals should be S.M.A.R.T.:

    Specific Measurable Attainable Realistic Time-bound ‍

    2. Do Thorough Market Research

    Once you’ve set company goals and understand where global expansion fits into them, you need to carry out thorough research into the markets you wish to enter. This will help you identify opportunities and obstacles before you start spending money to execute your expansion strategy.

    When done well, market research can help you maximize profitability, decrease risk, and reassure stakeholders and investors that your global expansion plans are substantiated.

    Here are just some of the questions you should answer before entering a new market:

    Is there a demand for your product or service?

    What is the total addressable market (TAM)?

    What’s the socio-political and cultural landscape like? Is it ready for a product like yours?

    Who are your competitors and can your product or service offer something new?

    How will the local laws and regulations affect your expansion plans? Can you overcome these barriers?

    Will you need to invest in localization to make your product or service successful in the new market?

    What kinds of talent are readily available in the target country? For example, does the country produce high-quality academics, leaders in a specific industry, or an abundance of tech talent?

    Source : www.omnipresent.com

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