| Going Global - 10 Key Considerations |
Globalization brings new challenges and opportunities for business. Today even the smallest business can take advantage of new international markets. Throughout the world, those companies not too bogged down by routine and complacency, which possess visionary leadership, are gaining international exposure, expanding markets, and increasing profits. Whether it is through exporting or the service industry, the opportunities as well as the challenges are real. In fact, the U.S. Small Business Administration (SBA) reports that small businesses currently represent 96% of all exporters of goods.
Another tantalizing fact about the opportunities of going global is brought by the growing size of the globalization industry where opportunities for all seem to exist in the new global village. Just to cite two points and according to conservative estimates by LISA, the localization standards organization, worldwide spending on localization in 2006 was $20 billion, and in 2005 more than 60% of Microsoft’s revenues came from markets outside the United States.
Most of the experts tend to place the credit of the opening up of markets and opportunities to the explosive growth of the Internet. The radical changes brought about by the global economies have allowed even small companies to compete outside their traditional markets. Of course, some strategies have been implemented by small entrepreneurs in tapping these low-cost advantages that the Internet offers to companies:
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A worldwide advertising and marketing platform.
• A worldwide sales platform.
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A worldwide distribution platform.
• A worldwide support platform.
There are two principal strategies now commonly employed for going global: one is establishing a relationship with a business or individual overseas; the other is developing a Web presence that makes products and services available worldwide.
There are no hard-and-fast rules as to which businesses should go global; however, making the decision requires careful assessment of the advantages and disadvantages of expanding into new markets. Whichever route one adopts, dealing successfully with the language and cultural issues is paramount to success. The
following checklist highlights issues worth considering before your business moves into international markets.
1. Quality of your product/services—to ensure success abroad, your product should be not only high quality and distinctive, but properly localized for the region. It’s tough to sell cheap merchandise abroad, and this challenge is compounded when products can be produced in-market or are not properly adapted for the region. You have to deliver a variety of high-quality goods and services, but in a localized manner. Localization thus involves the adaptation of any aspect of a product of service that is needed to be sold or used in another market. One phase that should not be missed in preparation of products to other markets is rigorous product testing against global specifications.
2. Flexibility and change in mindset—selling globally means catering to the needs and tastes of people whose cultures and tastes differ from yours. You need to be aware of the cultural taboos and sensitivities of your new market. This can be a humbling process. You must suspend quick judgments, become knowledgeable about the region, and evaluate the cultural differences carefully. Perception is affected by beliefs, and beliefs evolve with experience. Symbols that are innocuous in one culture may be offensive in another. As you become more experienced and knowledgeable, your perception will expand and you will be able to see things that were not clear before. Take time and avoid rushing into big decisions until you’ve developed the wisdom that comes from experience.
3. Language and cultural barriers—to effectively market your product/service, you need to be able to “speak your customer’s language” and be “culturally compatible” with your potential consumers. You must translate brochures and documentation with in-country foreign language accuracy, and localize your products and services to avoid costly and embarrassing mistakes. If you are thorough, clear and concise in providing instructions and open and receptive to communication and advice, you will minimize potential liabilities and errors. Almost any product or service to be sold to individuals who do not speak the language in which was created will require linguistic and cultural adaptation.
4. Product suitability—what works in the domestic market may not work in other markets. You may even need to revise your product to suit the climate and setting of the new market. If you intend to sell electronic products, for example, you must be certain they are suitable for different volt power abroad as domestic voltage is 120 volts in the United States, but most of the world uses 220 volts, and Japan does just 100 volts. Greater physical modification is required for certain equipments such as cars and computer keyboards. The process of adapting a product at a technical level for ready-made service in other countries is called internationalization.
5. Product/service names—cultural sensitivity includes ensuring acceptable product or services names. Some names may have unfavorable meanings or connotations in other countries. Take Mazda’s Laputa minivan. In Spanish, "la puta" means "the whore," not the best name for a global product. Also, check whether your logo or trademarks contain characters that may not be considered acceptable. If you do not have access to competent in-house language and cultural advice, it would serve you well to engage an expert.
6. Level of commitment—clarify your commitment to international trade and your reasons for exporting. You will need immeasurable patience, since preparations and clearances can take many months, and it might be some time before you make a single initial shipment. Realize as well that dealing successfully with other languages and cultures also means that you need to invest time and effort to understand and learn. Companies that are just starting their globalization process should analyze their target markets carefully in order to avoid significant losses.
7. Organizational structure—your organizational structure must have mechanisms for seeking out buyers and importers for your products. You also need to ensure multinational legal compliance (labeling, packaging, product safety, and liability laws, etc.) An alternative would be to hire an export management company to help you gain instant access to foreign market knowledge and export know-how. You also need to accommodate for localization and language expertise and decide whether you will provide these in-house or outsource them. Also, in-country accounting conventions should be kept in mind.
8. Additional costs—before new revenue is generated from your strategy, expect to pay additional costs, particularly for product modifications and production. You should also factor in translation services for your sales personnel and translation of your promotional and documentation materials. You might want to invest in language and cultural training as well. Be aware that you could face increased costs for communication (telephone and other) and travel as you visit the countries where you plan to market your products or services.
9. Product pricing—an important consideration is whether you can sell at a competitive price abroad. Acceptable price differentials in the domestic market may not hold true in other countries. Carefully consider the foreign exchange market and its volatility. Given the potential instability of a new market’s currency, your products may be priced too high or too low. An in-country marketing effort should be conducted to pave the way for the product release.
10. Level of competition—a more careful analysis of your market is needed to determine who your competitors are, both in-country and on the Web. The number of exporters providing the same product to the same market is a good indicator of the demand for your business. Finally, there are countries where you simply can’t ship goods, such as Iran, Iraq, Libya, Serbia, Sudan, North Korea, and Cuba. In some cases, U.S. Export Administration Regulations (EAR) require an export license for shipments to any country in the world. Further, the global market is so competitive that the speed of innovation leads to the speed of imitation by some companies.
Going global offers tremendous market potential for many companies; however, be prepared to do additional research and incur preparatory expenses to develop and implement an international business plan. That plan is an essential tool for proper evaluation of all the factors that could potentially affect your company’s success.
To learn more about resources available to help you do business overseas, understand cultural differences in business negotiations, and find international partners seeking your goods and services, check out in our Solutions area.
International Online Business Tools
Maximize your international online opportunities with the ABPT Global Language & Culture Web Gateway service. The system is designed to minimize language and culture complexity, reduce risk and cut costs for companies conducting business online.
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