Ch. 15: The Global Aspects of Entrepreneurship 15 - 1 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Ch. 15: The Global Aspects of Entrepreneurship 15 - 1Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall

Why “Go Global?”

Offset sales declines in the domestic market Increase sales and profits Lower manufacturing costs Lower product cost Improve competitive position Raise quality levels Become more customer-oriented

15 - 2Ch. 15: The Global Aspects of Entrepreneurship


Why “Go Global?”Before going global, ask:Is there a profitable foreign market in which our firm has the potential to be successful over the long run?Do we have and are we willing to commit adequate resources of time, people, and capital to a global campaign?Are we considering going global for the right reasons?Do we understand the cultural differences, history, economics, value systems, opportunities, and risks of conducting business in the countries we are considering?Is there a viable exit strategy for our company if conditions change or the new venture is not successful?Can we afford not to go global?



Nine Strategies for Going GlobalNine Strategies for Going Global

Ch. 15: The Global Aspects of Entrepreneurship

Creating a Web Site

Relying on Trade Intermediaries

Creating Joint Ventures

Foreign Licensing

International Franchising

Countertrading & Bartering

Exporting

Establishing International Locations

Importing &Outsourcing

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Strategies For “Going Global”

Create a presence on the Web



Internet Users by World Region



The Web’s Global Reach Available 24 hours a day to anyone anywhere

in the world. 2.3 billion Web users worldwide

245 million in U.S. Nearly 2 billion in other countries

23% of global retail sales will take place online by 2015

62% of eBay transactions take place outside the U.S.

More than 80% of Facebook users live outside the U.S.





Rely on trade intermediaries


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Trade Intermediaries Domestic agencies that serve as distributors

in foreign countries for companies of all sizes. Types of intermediaries:

Export Management Companies (EMCs) Export Trading Companies (ETCs) Manufacturer’s Export Agents (MEAs) Export merchants Resident buying offices Foreign distributors






Rely on trade intermediaries

Form joint ventures



Joint Ventures Domestic joint venture – two or more U.S.

companies form an alliance for the purpose of exporting their goods and services abroad.

Foreign joint venture – a domestic firm forms an alliance with a company in the target nation.

Most important ingredient: Choosing the right partner.

Use the joint venture as a learning process.





Create a presence on the Web Rely on trade intermediaries Form joint ventures Engage in foreign licensing Consider international franchising



International Franchising To expand internationally, franchisers should:

1. Identify the country 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. Direct franchising Area development Master franchising



Which Countries Rate Best For Franchising?





Create a presence on the Web Rely on trade intermediaries Form joint ventures Engage in foreign licensing Consider international franchising Use countertrading and bartering Export



Exporting

Companies with fewer than 20 employees account for 72% of all U.S. exporters.

Significant impact: Small and medium-sized companies generate $1.37 billion each day in export sales!



1. Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export.

2. Analyze your product or service.

3. Analyze your commitment to developing export markets.

4. Research potential markets and pick your target.


Steps to Successful Exporting

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall 15 - 18Ch. 15: The Global Aspects of Entrepreneurship

Number of Countries to Which U.S. Small Business Export


Steps to Successful Exporting

5. Develop a distribution strategy.

6. Find your customer.

U.S. Department of Commerce

International Trade Administration

7. Find financing for export sales.

8. Ship your goods.

9. Collect your money.




How a Letter of Credit Works





Establish a presence on the Web Rely on trade intermediaries Form joint ventures Engage in foreign licensing Consider international franchising Use countertrading and bartering Export Establish international locations Use importing and outsourcing


Steps to Successful Importing or Outsourcing

Make sure that importing or outsourcing is right for your business.

Establish a target cost for your product. Do your research before you leave home. Be sensitive to cultural differences. Do your groundwork.



Steps to Successful Importing or Outsourcing

Protect your company’s intellectual property.

Select a manufacturer. Provide an exact model of the product you

want manufactured. Stay in constant contact with

the manufacturer and try to build a long-term relationship.




Most Frequently Encountered Impediments to International Trade



Barriers To International Trade

Domestic Barriers Attitude: “My company is too small to

export.” Lack of information about

how to get started. Inability to obtain adequate financing.



International Barriers Tariff – A tax a government imposes on

goods and services imported into that country.

Nontariff barriers – Governments that protect domestic industries

Quotas - Limits on the amount of a product imported into a country.


Barriers To International TradeBarriers To International Trade



International Barriers Embargo - Total ban on imports of certain

products. Dumping - Selling large quantities of a

product in a foreign country below cost to gain market share.


(continued)



International Barriers Political barriers - Rules, regulations and

political risks. Business barriers – Different cost structures

and business practices. Cultural barriers - Differing languages,

philosophies, traditions, and accepted practices.


(continued)


International Trade Agreements

Major Agreements: World Trade Organization (WTO) North American Free Trade

Agreement (NAFTA) Dominican Republic - Central America

Free Trade Agreement (CAFTA-DR)



Guidelines For Success In International Markets

Take time to learn before jumping in.

Seek out assistance from professionals.

Make yourself at home in all three of the world’s key markets - North America, Europe, and Asia.

Appeal to the similarities in the various regions and recognize the differences in local cultures.

Develop new products for the world market.

Learn foreign customs and languages.



Guidelines For Success InInternational Markets

“Glocalize” - make global decisions about products, markets, and management and allow local employees to make tactical decisions.

Recruit and retain multicultural workers. Train employees to think globally. Hire local managers to staff foreign offices and

branches. Do whatever seems best wherever it seems best. Consider using partners and joint ventures to break

into foreign markets.


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Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall 1 - 3215 - 32Ch. 15: The Global Aspects of Entrepreneurship

Global effectiveness requires entrepreneurs to:

Learn about the global market Seek the assistance of professionals Recruit and train employees to think globally Consider using partners

and joint ventures Determine which opportunities best fit your

company

ConclusionConclusion

Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall 15 - 33Ch. 15: The Global Aspects of Entrepreneurship

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Ch. 15: The Global Aspects of Entrepreneurship 15 - 1 Copyright © 2014 Pearson Education, Inc. Publishing as Prentice Hall