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For many companies, doing business internationally sounds like a great idea. It’s easier than ever and a tried-and-true strategy that powers growth. And it’s an approach that’s worked well for the icons of American enterprise.
Thanks to the tech revolution, new free trade agreements, and global logistics partners, going global is no longer limited to corporate giants. A whole world of suppliers and buyers exists outside of your home market, and tapping into their potential is more possible than ever for mid-market (and smaller) companies. While some small companies create their own supply chains, others are key suppliers—the “mittelstand,” as German industry terms it—to larger organizations.
More than 95% of the world’s consumers now live outside of the United States; and yet only one percent of America’s 30 million companies export. But the advantages are clear. Companies that sell internationally benefit from 20% more productivity and 20% higher job growth.
Even so, caution is advised. “Global role models are much easier to admire than to imitate,” as the Harvard Business Review recently warned, adding that “most companies should not treat international expansion as a default growth option.” If there is risk in going global, there is great potential—when businesses go into it with their eyes open and their processes buttoned-up. Companies contemplating taking this crucial step have a long to-do list: they’ll need to cope with export issues, customs, technology, infrastructure, regulations, industry-specific mandatories (especially in healthcare), among other concerns. The ones that succeed will be the ones that have done the most homework and found the right partners. Gathering solid information is crucial. The U.S. Commercial Service is one place to start. They operate in more than 100 U.S. cities and are an excellent source of market intelligence to connect you to the right locations to find buyers for your products. Furthermore, the USCS can help you develop relationships with distributors and local business people you can trust in markets around the world.
It’s important to realize that, when it comes to working abroad, it is not safe to assume things work like they do in the U.S. Select a potential market, gather information on the demand for your products as well as local and foreign competitors. Be sure as well to understand tax laws, employment practices and local business customs. It is wise to visit and talk with local government officials, businesses, and potential buyers. And, of course, assess the market’s options for transportation and distribution. Find a logistics partner with expertise in that location.
Your commercial strategy for any given market should include, the following (according to Forbes Magazine ):
In addition, you should:
For a manufacturer, building dynamic supply chains, with flexibility and contingency plans built in, is of primary importance. From a risk perspective, supply chains are unequal. They range from simple—where deliveries are made from one destination to another within the same borders—to complex, involving multiple stops in multiple countries. The moments where custody changes, such as when a package moves between an airline and a ground handler, for example, are particularly vulnerable ones. That’s when the risk is high for delays and spoilage, theft and tampering, damage and delays—all of them costly problems that can even impact the end customer.
Companies should plan for every conceivable kind of risk, including security and geopolitical ones, and integrate them into their risk mitigation plans. Done correctly, expanding abroad can be advantageous for companies of every size. “Businesses that view the status quo as fixed and neglect to capitalize on emerging global opportunities will be blindsided," as the Harvard Business Review recently reported. “Those that find ways around the obstacles and prepare for the next stages in their industries will win out.”
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