Seven steps to success
What is an international business?
International business comprises all commercial transactions (private and governmental, sales, investments, logistics and transportation) that take place between two or more regions, countries, and nations beyond their political boundaries. Usually, private companies undertake such transactions or profit: governments undertake them for profit and for political reasons. It refers to all those business activities which involve cross border transactions of goods, services, resources between two or more nations. Transaction of economic resources include capital, skills, people etc. for international production of physical goods and services such as finance, banking, insurance, construction etc
Also known as - m.e.e.f.t.e.b
1. Market Viability and Entry
What is “Market Viability” anyway? Simply put, it’s really three things rolled into one. Let’s begin by explaining the things that make up this concept.
Acceptance viability - The acceptance of your product by the consumer (the market) that is, your product solves a problem, fills a need, creates a fad, or in some way is embraced by the consumer in such a fashion that they will trade you their hard earned money in exchange for having it. Your product, in short, brings value to the consumer’s life.
Production viability – It can be manufactured using materials and methods that result in the product doing what you claimed it can do in a way that provides quality of the physical product itself. It’s not going to fall apart after a few uses and it’s not going to cost a ton of money because of how it’s made and what it’s made with.
Fiscal Viability – The product can be manufactured, shipped, displayed, fulfilled, discounted, sold, and royalties paid all for a cost reasonable to the consumer. Now, keep in mind as a rule of thumb, you will be accomplishing all this for about ½ the retail price the consumer would pay. For example, if Future Shop would sell headphones for $10.00 in a store, they would have to get that entire math problem done for about $5.00. In some cases as low as about $3.00 per set.
There are numerous market entry strategies that a business can adopt when setting up offshore. Each has differing levels of risk, legal obligation, advantages and disadvantages. These are factors that should be considered when assessing the options: local office, strategic alliances, joint venture, acquisition, franchising, contracting, or global supply chains.
2. Export Strategy
Developing a sound export strategy helps you define your export aims and match your resources to those aims. Your export strategy will help you manage the market sectors you have identified as core business. Focusing your resources enables you to provide quality responses and service to your new export customers. A well-developed export strategy will help in dealing with a range of service providers. It singles you out as a company that has well-developed, realistic goals and programs designed to achieve them.
An export strategy must be integrated with your company’s overall business plan. Align export activities with daily operations and avoid any conflicts between your domestic and international activities.
Understand the areas where you have a strong competitive advantage. These areas may include your technology, your staff or business systems. Determine how best to use them to achieve your export goals. Also identify any weaknesses.
The key elements of an export strategy are to bring your key export goals into sharp focus – so you know exactly where to aim your efforts. Particular aims could include reducing seasonal demand swings, reducing fixed costs, fully realising production capacity, accessing new technology, consolidating your international reputation or matching the performance of your domestic competitors who are already selling offshore.
A German exporting company called Castle Brand Inc offers the prospect of new markets, more sales, better profits and a greater spread of customers. Without a clear strategy, however, none of these benefits are likely to be realised. Castly Brand Inc is often more risky and costly than doing business at home.
The first step Castle Brand Inc takes is to find out whether their products have any international potential and to assess the strength of the competitors. Next, they select the most promising markets, and then decide who to work with and how to market themselves.
Once the company starts to win orders, they encounter legal, financial and logistical challenges, particularly as they may be working in a different language and currency. A disciplined, professional approach from the start will help overcome these. Exporting can then develop into a highly profitable new phase of growth.
3. Effective Promotion
Ensuring that your company distances from advertising or promoting negative and inappropriate ideas is key when running an international business. This way, neither the company nor the community has to face serious dilemmas of offensive words, pictures, phrases or even profit-loss for corporations.
If you can show after a promotion runs that it generated increased sales and profits, and did so better than other promotional options you had, you can consider it effective. Running a sale that generates a profit of $5,000, for example, is not an effective promotion if you chose that tactic over running a direct mail program that usually generates a $10,000 profit. Some promotions don’t need to generate a profit to be effective. If you want to maintain your brand in the marketplace and remind your customers that you are able to serve them when they are ready to buy, a promotion that sends this message, even if it does not generate new sales or profits, is effective. Some promotions require selling products at a loss to get customers in the door so they spend money on higher-margin items.
Take a look at how Urban Outfitters faced a dilemma because of just one product demonstrating a negative impact for society's morals and values.
Featured in OSOCIO, a blog that focuses exclusively on social advertising campaign and non-profit campaigns which both strive to make people aware of world issues in order to make the world better
Don't drink and drive ad campaign.
Slovak Association of Dairy: Teeth
To gauge the effectiveness of your promotions, set a variety of benchmarks to evaluate each. Review your website and social media traffic during the period of a promotion to gauge its impact on customer activity. Calculate your cost to run the promotion, including your staff time, money you paid contractors to create materials, media and printing costs and opportunity costs. Opportunity costs are benefits you lost by using your time, effort and money to do something else. Instead of using gross sales and revenues as benchmarks of success, determine your gross profits and profit margins on a promotion to determine your return on your investment, and compare this to other promotional opportunities
Review your promotions as to how they helped you achieve other marketing goals, such as your branding, distribution and pricing strategies. Some promotions that do not make much money for you might keep distributors satisfied with your efforts to help them boost sales, helping you keep these accounts. A branding campaign might not have a direct sales benefit but can help you keep or grow market share throughout the year. Having a sale that helps you close out slow-moving inventory and bring in quick cash might damage your brand if customers see you as a discounter. Use customer and supplier surveys to get feedback beyond sales numbers regarding your promotions.
Here's what you need to do:
1. Target your effort
Promotions can spur purchases by established customers, reel in new customers, draw customers from competitors, get current customers to buy differently, and stimulate business during slow periods. But rarely can one promotion accomplish all of those objectives at once. As a result, you must decide which of the following is most important so that you can target your effort:
· Do you want customers to purchase more frequently, buy in greater volume, or be attracted to new or different offerings?
· Do you want to lure new customers into your business?
· Do you want lapsed customers to give your business another try?
· Do you want to boost business during slow hours, weekdays or particular seasons?
After carefully and thoughtfully defining the audience and the change you want your promotion to inspire, ask yourself this question: If you offer a time-limited incentive, is it likely that the customers you've targeted will respond? If so, continue to the next step.
2. Plan your incentive
A well-thought-out, properly targeted promotion prompts customers to take action by offering one of these incentives:
· Price savings, including discounts, coupons or added value offers
· Samples or trial offers to provide a low-risk way to try new products or services
· Events or experiences to generate crowds, enthusiasm, sales, publicity
3. Know what you want to achieve
Promotions work especially well when consumers are in need of a jolt to take buying action. Just be clear about what you want to achieve. Set the number of sales you want to ring up, dollars you want to bring in, customer names you want to collect, buying patterns you want to change, or any other objective you want your promotion to achieve. Then determine what your desired change will mean financially to your business.
By knowing the potential bottom-line impact of your promotion, you'll have the information you need to allocate a promotion budget, dedicate staff time and invest the energy necessary to host a strong promotion that will deliver business-boosting results over the time period it covers.
Winning an export order or contract is hard work, but the work does not stop there. Making sure your business can fund the contract, and making sure you get paid by your customer, are key issues that every exporter faces.
Finance is one of the stepping stones to creating a successful business. It is always important to know where your money is going and where it is coming from. Blinding knowing that you have enough money for your company is not enough. Being responsible about who you are investing with, which company's and the reason for each is key to running a well-established corporation. Understanding ways to manage the company's money is critical to running a business, this will rid of any confusions and future misunderstandings.
There are many programs to help you with grants to establish your export business. Check out the range of financial products to help you get started in export. Credit insurance is a must for new exporters. Factoring is also a facility to consider to help your cash flow. Accountants can help you manage the application process
Your export budget will be largely determined by the countries or markets you are targeting and the products or services you are exporting.
For example, a market visit to the United States will usually be more expensive than a market visit to a country in Asia, while sending away samples of high end medical devices will cost more than sending small samples of wine.
An export budget should cover all the costs you are likely to incur when marketing your products or services offshore, as well as the costs needed to run your export business. Allowances should be made for:
- Marketing and market entry costs such as:
- Regular visits to your target markets.
- The provision of samples.
- Potentially hiring a dedicated export manager if the owner of the business or sales manager does not have the time to cover this role.
- Market entry consultants and legal or business advisory services.
- Working capital:
- The reality is that payment for most export contracts is received by the exporter after delivery of the goods or service.
- This means that for products, production costs such as raw materials will need to be purchased prior to you being paid by your customer. Delivering services may not incur such significant input costs; however, some outlay is usually required before receiving payment as well.
Take a look at the link to find out more about a man in Ontario who ran a $15 million scheme, who is now banned from securities trading. This is why it is necessary to know where your money is going or coming from.
5. Technological Advancement
Advances in technology can make running your company easier and less expensive. Interactive software programs can eliminate the need to train your employees on their benefits package. A step-by-step online training program can be used to not only help employees understand their benefits at their own pace, but it can also help employees fill out the paperwork. All of this is done without the need to hire additional human resources personnel to administer the training and process the paperwork. This can apply to all new-hire paperwork and ongoing administrative forms and information that your company needs. When technology collects and processes the information for you, your human resources group has more time to focus on developing a better workforce.
Technology allows you to merge inventory needs as projected by the purchasing department with the manufacturing group to ensure accurate production levels. Computer software can deliver production needs to the manufacturing department, create ordering schedules with vendors and schedule pick-ups and deliveries with shipping companies. Advances in technology allow your staff to focus on their jobs without having to track several activities at the same time and improves overall productivity.
This way, your customers are using mobile communications devices and Internet websites to find information and purchase products. By getting involved in the advances in technology, you can offer customers new ways to purchase products and help customers to get instant support for product returns and shipping issues. For example, advances in technology allow you to have an e-commerce website where customers can purchase products from their computers. An an e-commerce website allows you to put applications on mobile devices that allow your customers to track orders and buy products when they are not near a computer.
Creating online forums, emails, blogs, flyers, and an online shopping sites for your company can become a basis for promotion and motivating customer's to view your product or service. For example, H&M has created their own virtual dressing room, which allows individuals to try on clothes in their measurements without physically putting them on. The dressing room ads up their total dollar value to make it easily accessible for consumers.
Business ethics are moral principles that guide the way a business behaves. The same principles that determine an individual’s actions also apply to business.
Acting in an ethical way involves distinguishing between “right” and “wrong” and then making the “right” choice. It is relatively easy to identify unethical business practices.
Take a deeper look at how Starbucks is able to maintain and manage their ethical code of conduct.
One of the reason Starbucks is so successful on an international level is due to their focus on ensuring their positive ethics and maintaining a strong corporate social responsibility. Starbucks focuses on the community, environment, ethical sourcing, wellness and diversity aspects of their corporation. They are committed to buying and serving the highest-quality, responsibly grown, ethically traded coffee to help create a better future for farmers. And that is the #1 reason why they are so successful internationally.
For example, companies should not use child labour. They should not unlawfully use copyrighted materials and processes. They should not engage in bribery. In recent years, there have been increased potential for enforcement of ethical obligations for companies with international operations. Internally, a company has to ensure its operations are corruption free. That requires clearly articulating expectations, a lot of training and attention to taking employees through the consequences of unethical behaviours.
Fair Trade is a different way of doing business. It's about making principles of fairness and decency mean something in the marketplace.
It seeks to change the terms of trade for the products we buy - to ensure the farmers and artisans behind those products get a better deal. Most often this is understood to mean better prices for producers, but it often means longer-term and more meaningful trading relationships as well.
For consumers and businesses, it's also about information. Fair Trade is a way for all of us to identify products that meet our values so we can make choices that have a positive impact on the world.
For ab better understanding on the benefits of fair trade and how it may help your corporation, click the button above.
Environmental ethics is the part of environmental philosophy which considers extending the traditional boundaries of ethics from solely including humans to including the non-human world. It exerts influence on a large range of disciplines including environmental law, environmental sociology, ecological economics, ecology, and environmental geography.
Sustainable development is the ability to meet human consumption while maintaining the environment is a critical issue that all business need to consider to ensure their futures. Many companies have taken advantage of the environment by polluting, depleting natural resources, and disposing of hazardous waste in unsafe ways. For example, sweatshops are factories in underdeveloped and developing countries where the employees work in unsafe environments; they are treated unfairly and have no chance to address the conditions. Sweatshops pay poverty wages that provide only one-quarter to one-half of a living wage in the community. The International Labour Rights Forum explains, "The official inductees of the 2010 Sweatshop Hall of Shame are: Abercrombie and Fitch, Gymboree, Hanes, IKEA, Kohl’s, LL Bean, Pier 1 Imports, Propper International, and Wal-Mart. " This sets a different image of the corporations despite their other successes and advancements.
7. Building international relationships
Successful interpersonal relationships are a prerequisite for doing business internationally. Increasing international competition requires business professionals to have skills in interpersonal communication in order to gain competitive advantage. The best prepared are the most successful. Certain approaches are preferable. This workshop gives you the framework for developing these skills. In the process of building this framework you will learn that the value of cultural bonding and friendship building (not acquaintance building) are indispensable parts of successful international business relationships. Professionals with finely tuned interpersonal skills are the best marketing tool any company can have.
Whether or not you tap into international markets and get the best price for the goods you seek depends in part on how you build these relationships. In most nations, particularly those in Latin American, the Far East and Africa, developing relationships with international business agents requires patient friendship building. Long term success for your company may depend on it. This does not mean you will never have a successful transaction unless you make friends first; it means that ongoing success requires it. You can separate your company from your competitors by developing long-term relationships which allow you to have the inside track to limited resources.
A global automotive company entered the mainland China market following what it thought were the rules. Executives knew gifts were an important personal gesture and integral to Chinese business etiquette. They also knew that success in Chinese business culture was as much about whom you know as what you know.
To make the right connections, the company sponsored events and hosted lavish dinner parties to cultivate personal ties, including the all-important guanxi (commonly defined as personal connections between people doing business). Several years later, the company faced the fact that its efforts were producing minimal results.
As they tried to discover why, executives learned that despite all their efforts, the company had actually acquired a bad reputation among potential Chinese industry partners. The potential partners had come to view the company as a seeker of short-term transactional opportunities wrapped in expensive entertainment.
The Chinese executives the company had carefully courted socially now viewed it as a source of free entertainment — a perk they came to expect with every interaction. Even worse, the potential Chinese partners had developed the impression that the company had few compelling business propositions to offer since it did not seem to be focused on doing business. Although the company knew the people it needed to know, like many other companies eager to gain a foothold in China, it had failed in its efforts to build critical relationships —and as a result, its business initiatives failed too.