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Trade Routes: Global Threat or International Opportunity?

Michael Wynne
Back to the May Issue

We need to distinguish between global and international business. While we live in a global market, few companies actually have the resources to become truly global and, for many companies, doing business on a global scale is neither practical nor profitable. Simply put, not all markets are appropriate targets for all companies. When it comes to international business–marketing in other countries–smaller companies have the edge because they can be more responsive and flexible.

While a company’s placement may be international, its competition definitely is global. Companies from anywhere in the world can compete for and potentially take away your business. In fact, at this very moment someone somewhere around the globe is probably working 24/7 with this precise goal in mind.

So, because your market is someone else’s target, whether you want it or not, you are in the global market. Since the best defense is a good offense, companies must develop strategies along the following lines:
•    What are you going to do to defend your business from the threat of global competition?
•    What are you going to do get your share of international market opportunities?

The Best Defense
Having said that the best defense may be a good offense, taking business away from someone in a foreign market will not necessarily defend business share at home. The worst enemy in a home market is complacency. Your best allies are your customers—if you listen to them.

We live in an era of changing times and changing customers; but if you don’t pay enough attention to how they are changing, then how can you cater to their evolving needs and preferences? And if you can’t satisfy your customers’ evolving needs and preferences, how can you keep them?

Communication is the key to customer retention. How often do you communicate with your customers? Or more to the point: How often do you actually converse with them? Conversing is different from communicating with questionnaires and other research tools; conversing is personal. Conversations allow, even encourage, the exchange of views, ideas, opinions and personal information. You find out things about others, and they about you. These exchanges are the elements of customer intimacy, which is your best defense against competitors, regardless of where they come from.

On a recent business trip to San José, Costa Rica, where I was speaking at a packaging convention, I had a delightful conversation over lunch with an old and very wise friend, Leopoldo Barrionuevo. We talked about the importance of communicating with customers, and Leopoldo said something that really got my attention: “When we converse, we convert.” How true! Exchanges during conversation help create interdependency with our customers, and interdependency is the key to long-term relationships. By conversing with your customers, you convert them from customers into friends. By converting customers into friends, you defend your business from that person who is working 24/7 to take them away from you.

International Market Opportunities
Ninety-five percent of the world’s population lives outside the U.S. Their needs are growing and, in many countries, so is their disposable income. Most U.S. markets are mature, crowded and slow growing. The fastest growing cosmetics markets are overseas, and it is not that difficult to carve out a share of them for your business.

The idea is to pick the best foreign markets for your products and services. By best, I mean the most suitable—where your products and services will sell well, and generate a worthwhile profit.

What does it take to grow your business internationally in today’s global market? The standard advice is Think global, but act local. At the local level, however, there are no recipes, no formulas, no one-size-fits-all solutions guaranteed to bring success to your international business efforts. There are some steps, however, that do lead to better results.

1.    First, define what it is that you have to offer. Please notice that I did not say “define the product you have to offer.” What you have to offer is the sum of your product, services, benefits, pricing, appeal, brand and your potential for solving an existing problem, need and desire.

2.    Next, develop a profile of the ideal market for what you have to offer. It is much easier to find what you are looking for by defining it first. Make a list of the qualities you would like to find in the markets that best serve your needs. For example, ease of entry might be a key factor; you want a country that doesn’t penalize foreign products with heavy taxes and restrictive customs regulations. Other criteria might be strong local demand, lack of competition, higher levels of income, storage facilities, dependable transportation, etc.
Create a matrix chart listing potential countries on the top horizontal line and criteria on the left vertical line. Then, on a scale of lowest (1) to highest (10), rate each criterion for each country. Add up the points for each country and you will have the beginnings of a clear ranking order.

3.    Do your homework before choosing markets. Every situation in every market in every country is different. Beware of assumptions and generalizations; they can be very misleading when deciding which countries offer the best potential for your specific products and services.

Try to gather as much information as possible about the specific country or countries you wish to explore before you make any decisions. The U.S. Department of Commerce offers a wide variety of very helpful international business services, many of them for free. They can help identify appropriate markets and show you how best to enter them.

It also pays to contact the local consulates of specific countries. It is amazing the volume of useful information—including names of contacts—they can provide.

A note of caution about choosing markets: Don’t be misled by size. For example, China and India are huge markets with extraordinary potential, but are they right for your products and services? Many of the customs, circumstances and values of China and India are very different from those of the U.S. Be sure they have a major impact on what people like and can afford to buy.
On the other hand, don’t be misled by generalizations either. India is viewed by many as a poor country, yet its middle class is larger than the entire population of the U.S.

4.    Finally, think big—but start small. Dip your toe into the water; don’t plunge into it. Because there are so many differences, especially cultural ones that can have a major impact on the acceptance of your offerings, you need time to go up the learning curve in every international market. The Italians have a saying, Piano, piano, va lontano, which essentially means, “Slowly, slowly, goes farther.”
Bottom line: You are in the global market because competition from around the world wants to take business away. To survive, you must retain your customers. To do that, create interdependency. Find ways to converse with your customers thereby creating customer intimacy. You must also grow faster than your home market. Go where the faster growing markets are internationally. Choose carefully, proceed methodically and cautiously, and you will go far.
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