Going International

1. Going International Expanding Your Business Geographically

2. Reasons For Going International Open up new markets or windows of opportunity Increase sales volume Cheaper resources -- material and labor Government programs -- tax exemptions, interest-free loans, grants In line with growth goals Importing opportunities

3. Exporting (direct or indirect) � Maintaining a national production base and exporting goods to foreign markets Licensing � Acting as a Licensor and allowing a foreign firm to use your technology or produce & distribute your products Franchising � Allowing other firms to operate an international franchise Strategic Alliance / Joint Venture � Entering a new market outside your home country by allying yourself with a foreign firm in that country Wholly Owned Subsidiary - Entering a new market outside your home country through Acquisition strategy � by buying up a local firm in that country Greenfield strategy � by starting a completely new firm in that country Internationalization Strategies

4. Market Research The acceptance/need of the product or service must be assessed Key factors in determining the attractiveness of a foreign market include: The market size Intensity of competition Tastes and preferences of the market Culture Political and economic factors (taxes, quotas, tariffs, exchange rate, interest rates, inflation, political stability) ? Understand the market you are entering

5. Sources Of Relevant Market Information Market studies: available at most consulting firms Chamber of commerce Export agents Banks Trade fairs Visiting the foreign market

6. Exporting The least risky mode of international expansion Direct exporting Foreign market is selected by the entrepreneur or sales person Operation is the responsibility of the entrepreneur or sales force Requires investment and risk Indirect exporting Involves export agent; requires little investment; minimizes risk Sales are responsibility of the agent -- no sales office or expertise of the market is required

7. Licensing The selling of trademarks, trade secrets, know-how or the right to patents for a royalty An appropriate strategy for firms who lack the knowledge or resources to enter a foreign market This strategy has a record of success for small business owners The drawback is a loss of control over the operation (quality control of other firm, stolen technology)

8. Strategic Alliance / Joint Venture Joint Venture: A project carried out by two or more firms � a new separate company is established -- the sharing of control and profit Most common in low-wage countries Often undertaken when one partner lacks the expertise, resources or technology to act alone The responsibilities are split in a number of ways: Marketing Alliance/JV: one firm is responsible for production, the other marketing Technical Alliance/JV: one firm provides technical expertise to the other (i.e. New product development, manufacturing, design, quality control) Partnership: there is an equity relationship between the parties, both share in the decision making

9. Wholly Owned Business Acquiring or building (Greenfield) an operation in the foreign market Provides direct access and control over the operation (as well as profits) Requires substantial investment and requires a detailed understanding of the nuances of the market Knowledge of laws and regulations on transfer of profits is key to success

10. Internationalization Strategies Indirect exporting Direct exporting Licensing Alliance/Joint venture Wholly owned subsidiary