In previous editions of this article series the importance of international
awareness for everyone, international marketer or not, has been mentioned
several times. However, the reasons why companies go international with
their products, and the ways they choose to do so, have only been discussed
very briefly. Yet, it may be interesting to look into this aspect a little
more extensively, in order to draw our own conclusions regarding the
products we purchase and the companies that carry them.
First of all, there are two main reasons for companies to be distincted when
it comes to going global: either they do it proactively, or reactively. The
ones that operate proactively are usually blessed with a daring top
management. This can have its origins in two possible facts: either the
management team is new in the company and enters with some previous
international experience, or the established management team may have had
some eye-opening experiences through courses or visits abroad that triggered
their spirit of international adventure.
But there are also other proactive reasons why companies decide to choose
the international route, of course. Think of their realization of the
increased profitability that market expansion can represent. Or their
awareness that the product they bring forth is unique and may be widely
desired beyond the borders of the domestic market. Or the nature of the
companyÆs product-line that may be of such technological advancement that
there is no doubt whatsoever that other markets will need them as well. Or
the companyÆs capability to access information about other markets that
gives them the opportunity to penetrate into those before competitors do. Or
maybe the fact that a company has more production capacity than it uses for
the local market, while the entrance into new markets will lead to
additional production and, hence, lower costs per product: the economies of
scale principle.
But then there are those who only access international markets when they
have to: the reactive ones. They only go international when they are forced
by the actions of competitors: if they donÆt follow the international route
they will miss the boat. Or they may go international because the local
market has no use for their product anymore for some reason, either due to
saturation or more attractive alternatives from competitors that made this
companyÆs products less desired or maybe even plainly obsolete at home: then
the international forum is explored. It can also be that these companies are
literally forced by their distributors with international experience to jump
into the international caravan. The distributors engage into this job of
encouraging for their own benefit in the first place, of course, but the new
exporter may also profit from this move if made right. Finally, they may get
involved in exporting when there are enduring and persistent requests for
their products from potential customers abroad in such a way that turning
these orders down would be financially irresponsible.
Now, the companies that are a little cautious of international activities
will only explore the foreign waters very carefully: they may start with
psychologically close markets first. These are markets that are fairly
similar to the domestic one, so that they wonÆt have to apply too many
adaptations to the product or the established marketing strategies. An
example of psychologically close markets are the U.S. and Canada: countries
that have large overlapping in cultural approaches. ItÆs only when these
careful exporters have experienced a sufficient amount of success in the new
market and feel a little more content in their new operations, that they may
dare to explore less psychologically close arenaÆs.
The reactive companies are also very likely to export with the
intermediation of either an export management company or a trading company,
both reputable sources when it comes to international business experience.
Sometimes a company does not go into export directly, but does so through
licensing or franchising. Licensing entails that they permit a foreign
company to use their name, process, knowledge, or property against a royalty
payment, while franchising involves the use of the entire business
operations, name, processes, and appearance against an established fee.
Examples of franchises are, as you probably know: McDonalds, Kentucky Fried
Chicken, Pizza Hut, etcetera.
Important for anyone who considers going international is to know that there
are limitless ways to do this. Some of these ways were discussed in this
article. However, there are so much more options possible. However, the most
vital piece of information to keep in mind may be that the more directly
involved a company is, the more it will learn about international markets,
and the more successful it will be in the end. On the other hand: the more
cautiousness a company applies, and the less involvement in foreign markets:
the more vulnerable this company becomes when things go wrong in the
domestic market. ThatÆs why itÆs important to have some kind of global
involvement: international marketer or not!
Joan Marques, Burbank, October 14, 2003
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About the Author:
Joan Marques, holds an MBA, is a doctoral candidate in Organizational
Leadership, and a university instructor in Business and Management in
Burbank, California. You may visit her web site at www.joanmarques.com
Joan's manual "Feel Good About Yourself," a six part series to get you over
the bumps in life and onto success, can be purchased and downloaded at:
http://www.non-books.com/FeelGoodSeries.html
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