“It’s not a matter of if, rather when you go international.”. What strategy will you choose? Exporting ( Most common, least risky) Licensing Licensor offers know-how, technology, brand name in exchange for royalties Lower risk but also lower profits Franchising
What strategy will you choose?
1. Increased costs.E.g. Traveling abroad to obtain orders; High management fees, shipping charges, agent's fees, etc.,
2. Understanding and following import laws and regulations, which vary and change rapidly and dramatically in some cultures.3. Transportation policy.Shipping rules and regulations complicated
4. Currency. The earlier advantage of a strong currency in exchange for a weak dollar might, in alternative circumstances, prove detrimental to the exporter.5. Collecting long-standing payments and debts can prove difficult.
1. Increased market size and brand (global brand) awareness2. Currency benefits -Changes in exchange rates can prove advantageous when selling to a customer whose currency is stronger than your own.3. Protection against a downturn in the domestic market.
4. Protection in the event of world recession - it is unlikely that all countries will be equally affected by an economic downturn. 5. Economies of scale from manufacturing in larger batches.
Manufacturers, producers, assemblers and processors who export their own goods.
Many fail. For example, story of an insurance salesman from South Dakota who abandoned his insurance business for the pot of gold. He incorporated himself as an ETC, packed his bag for a four-day stay, and took off for Hong Kong, expecting to land several orders for whatever anyone wanted to buy. On the flight over, his seat partner asked what product lines he represented. His response typified the naivete of the new traders. “Any product you want. I’m going to get the order first and then source out a supplier back in the States.”