CHAPTER

15

Global Aspects of Entrepreneurship

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2011Pearson Education, Inc. Publishing as Prentice Hall

Why Go Global?
In addition to the text

Offset sales declines in the domestic market Increase sales and profits Extend products life cycles Lower manufacturing costs Lower product cost Improve competitive position Raise quality levels Become more customer-oriented
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Ch. 15: The Global Aspects of Entrepreneurship

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Nine Strategies for Going Global

Creating a Web Site Establishing International Locations Importing & Outsourcing Creating Joint Ventures Exporting Relying on Trade Intermediaries

Countertrading & Bartering

Foreign Licensing

International Franchising

FIGURE 15.1
Ch. 15: The Global Aspects of Entrepreneurship Copyright

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Strategies For Going Global

Create a presence on the Web

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Asia 41.2%

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The Webs Global Reach

Available 24 hours a day to anyone anywhere in the world. 1.60 billion Web users worldwide

220 million in U.S.

Nearly 1.4 billion in other countries

Customers who live outside the U.S. account for more than 50% of all online sales by U.S. companies 54% of eBay transactions take place outside the U.S.
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Strategies For Going Global

(continued)

Create a presence on the Web

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) Manufacturers Export Agents (MEAs) Export merchants Resident buying offices Foreign distributors

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Strategies For Going Global

(continued)

Create a presence on the Web

Rely on trade intermediaries Form joint ventures

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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.
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Strategies For Going Global

(continued)

Create a presence on the Web

Rely on trade intermediaries

Form joint ventures

Engage in foreign licensing

Consider international franchising

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2011 Pearson Education, Inc. Publishing as Prentice Hall

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International Franchising

To expand internationally, franchisers should:

1. Identify the country or countries that are best

suited to the franchisers business concept. 2. Generate leads for potential franchisees. 3. Select quality candidates. 4. Structure the franchise deal. Direct franchising Area development Master franchising

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Ch. 6: Franchising and the Entrepreneur

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Strategies For Going Global

(continued)

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
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Exporting

Small business accounts for 90.7% of all companies involved in exporting, but they generate just 21% of the dollar value of the nations exports. Significant impact: Small companies generate $1.1 billion each day in export sales!

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Steps to Successful Exporting

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.

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FIGURE 15.4

Small Business Exports: Number of Countries to Which Small Companies Export

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Ch. 15: The Global Aspects of Entrepreneurship

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2011 Pearson Education, Inc. Publishing as Prentice Hall

Steps to Successful Exporting

(continued)

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.

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FIGURE 15.5

How a Letter of Credit Works

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Strategies For Going Global

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
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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.

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Steps to Successful Importing or Outsourcing

(continued)

Protect your companys 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.
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Barriers To International Trade

Domestic Barriers

Government imposed barriers.

Attitude: My company is too small to export. Lack of information about how to get started.

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Barriers To International Trade

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.

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Barriers To International Trade

(continued)

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.

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Barriers To International Trade

(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.

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International Trade Agreements

Major Agreements:

World Trade Organization (WTO) North American Free Trade Agreement (NAFTA) Dominican Republic - Central America Free Trade Agreement (CAFTA-DR)

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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 worlds 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.

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Guidelines For Success In International Markets

(continued)

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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Conclusion
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

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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