Entrepreneurship and small business management chapter 10

Entrepreneurship and
Small Business
Management
Chapter 10
Marketing Globally


Ch. 10 Performance
Objectives
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Identify the reasons for ventures to market
globally.
Understand the various strategic options for
global ventures.
Explore the challenges to international
trade.
Learn about the types of support that are
available for global ventures.
Describe regional trade agreements that
influence global trade.

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Reasons to Market
Globally


Expand market opportunities.

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Acquire access to resources that are
scarce or more competitive.

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Reduce costs for materials, labor, etc.

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Utilize advantages in a specific location
such as skilled artisans, tax breaks, etc.



Improve product/service quality levels.

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Importing
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The sale of products produced in a foreign
country to customers in your home
country
Consider importing to…
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Sell a product not produced at home
Take advantage of better cost/quality factors
Remain competitive

Some information resources:
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Foreign embassies and consulates
National Customs Brokers and Forwarders
Association of America

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Exporting


Selling goods or services produced
domestically to foreign customers



Higher growth rates and lower failure
rates reported by companies that export,
compared to those that do not



Trade intermediaries—serve as
contract distributors of products between
countries; have extensive trading
networks and contacts

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Reasons to Export
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Enhance competitiveness
Increase sales and profits
Gain global market share
Reduce dependence on
existing markets

Exploit corporate
technology and know-how
Extend sales potential of
existing products

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Stabilize seasonal
market fluctuations
Enhance potential
for corporate
expansion
Sell excess
production capacity
Gain information
about foreign
competition
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Exporting May Require You
To:
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Subordinate short-term
profits to long-term
gains
Hire staff to launch the
export expansion
Modify products or
packaging
Develop new
promotional material
Incur added
administrative costs

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Dedicate personnel
for traveling
Wait longer for
payments
Apply for additional
financing
Obtain special export
licenses

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07458.


Strategic Global Alliances
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Strategic alliance—partnership between

two or more firms in which each one
provides a particular set of skills or
resources
International strategic alliance—partners
from at least two countries; one partner is
located in the targeted geographic area
Benefits include:

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Reduced risks
Greater potential rewards

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Other Global Venture
Strategies


License products and processes
globally to get the greatest benefits
from intellectual property.

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Sell franchise units on an international
scale to enter new, profitable markets.



Operate international facilities to create
better supply to regional customers.

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© 2012 Pearson Education, Upper Saddle River, NJ
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Economic Risk of Global
Trade


Changes in a foreign country’s
economy may cause financial or
other harm to your business.



Examples:

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Failure of payment by foreign
customers
Exchange-rate risk

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© 2012 Pearson Education, Upper Saddle River, NJ
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Political Risk of Global Trade


Changes in a foreign country’s
political structure and policies may
negatively impact your business.



Examples:
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A ban on imports
Prohibition of foreign direct investment
Government seizure of foreign assets
Regulations which reveal trade secrets

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Organizational Capacity


Will your firm have enough capacity
to participate in international trade?

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Factors to consider:
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Management’s expectations and objectives
Previous global trade experiences
Personnel requirements (time and talent)
Production capacity
Financial capacity

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Legal and Regulatory
Barriers


Tariffs—taxes or duties on goods and services
imported into a country



Quotas—limits on the amounts of specific
products that can be imported into a country



Embargo—a ban on the import of all products
(or specific ones) from a particular nation



Laws against dumping: When companies price
products below cost and sell large quantities in
foreign markets, it can harm domestic firms.

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Cultural and Ethnic
Considerations
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Culture—the values, perspectives, beliefs,
and norms shared by a group of people

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An acceptable business practice in one
country might be considered rude and
inappropriate in another.



Other factors include foreign peoples’…
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Language differences
Perceived importance of personal relationships
Expectations of product/service quality

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Sources of Global Trade
Support
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U.S. Department of Commerce
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International Trade Administration
Export portal ()
U.S. and Foreign Commercial Services

Small Business Development Centers
U.S. Export Assistance Centers
District Export Councils
Publications such as International Trade
Forum and World Trade Magazine

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Resources for Trade Leads
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The Federation of International Trade
Associations has list of no-fee Web sites.

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Fee-based services will develop leads.

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Trade missions provide travel
opportunities to countries of interest.



Trade intermediaries can help with initial
marketing and communications.

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Forms of Financial
Assistance
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Letters of credit
Working Capital Loan Program (EWCP)
Export Express Loan Program
International Trade Loan Program
Ex-Im Bank’s Export Working Capital
Program
Export Medium-Term Delegated Authority
Program
Ex-Im Bank’s Loan Guarantee Program

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Trade Agreements
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Regional Trade Agreements (RTAs)
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Regulate trade between participating
countries called Member States
Help facilitate trade on a regional basis by
cutting tariffs and reducing border barriers

Regional Free Trade Agreements (RFTAs)

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Go beyond RTAs to increase market access
Simplify regulations and reduce tariffs to zero

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© 2012 Pearson Education, Upper Saddle River, NJ
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Significant RTAs and RFTAs
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European Union (EU or EC)
European Free Trade Association (EFTA)
North American Free Trade Agreement
(NAFTA)
Southern Common Market (Mercosur)
Association of Southeast Asian Nations
(ASEAN) Free Trade Area (AFTA)
Common Market of Eastern and
Southern Africa (COMESA)

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© 2012 Pearson Education, Upper Saddle River, NJ
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