CHAPTER 13 Global Aspects of Entrepreneurship

1. CHAPTER 13Global Aspects of Entrepreneurship MAN 470 – Berk TUNCALI

2. National borders are no longer defensible against the invasion of knowledge, ideas, and financial data. -Walter Wriston • The new electronic interdependence recreates the world in the image of a global village. -Marshall McLuhan

3. Why Go Global? • Offset sales declines in the domestic market. • Increase sales and profits. • Extend your products’ life cycle. • Lower manufacturing costs. • Lower the cost of their products. • Improve competitive position and enhance reputation. • Raise quality levels. • Become more customer-oriented.

4. Why Go Global? (cont’d) Before venturing into the global marketplace, entrepreneurs should ask themselves six questions: • Is there a profitable market in which our firm has the potential to be successful over the long run? • Do we have and are willing to commit adequate resources of time, people, and capital to global campaign? • Are we considering going global for the right reasons? • Do we understand the cultural differences, history, economics, value systems, opportunities, and risks of conducting business in the country (or countries) we are considering? • Is there a viable exit strategy for our company if conditions change or the new venture is not successful? • Can we afford not to go global?

5. Strategies for Going Global • Creating a presence on the web(fcbk, ebay, amazon) • Trade intermediaries • Export management companies • Export trading companies • Manufacturer’s export agents • Export merchants • Foreign distributors • The value of using trade intermediaries • Joint ventures(temporary partnership) eg. MillerCoors, SonyEricsson,

6. Strategies for Going Global (cont’d) • International franchisingeg. Mcdonalds with teriyaki burgers or vegetarian mcnuggets, Domino’s Pizza with different topics • Identify the county or countries that are best suited to the franchiser’s business concept. • Generate leads for potential franchisees. • Select quality candidates. • Structure the franchise deal. • Countertrading and bartering Countertrading: company selling goods in a foreign country agrees to promote investment and trade in that country. Bartering: exchange of goods and services for other goods and services. • Foreign licensing

7. Strategies for Going Global (cont’d) • Exporting • Step 1: recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export. • Step 2: analyze your product or service. • Step 3: analyze your commitment. • Step 4: research markets and pick your target. • Step 5: develop a distribution strategy. • Step 6: find your customer. • Step 7: find financing. • Step 8: ship your goods. • Step 9: collect your money.

8. Strategies for Going Global (cont’d) • Establishing international locations • Importing and outsourcing(call centers in İndia) Entrepreneurs who are considering importing goods and service or outsourcing their manufacturing to foreign countries should follow these steps: • Make sure that importing or outsourcing is right for your business. • Establish your target cost for your product. • Do your research before you leave home. • Be sensitive to cultural differences. • Do your groundwork. • Protect your company’s intellectual property. • Select a manufacturer. • Provide an exact model of the product you want manufactured. • Stay in constant contact with the manufacturer and try to build a long-term relationship.

9. Barriers to International Trade • Domestic barrierseg. information and financing • International barriers • Tariff barriers(tax on exports to keep under control) • Nontariff barrierseg. rules of origin, packaging conditions, labelling • Quotas(limitation on export/import) • Embargoes(prohibition of commerce from a particular country) • Dumping(Predatory pricing) Exporting at a price lower than the sale price at home market • Political barrierseg. Petrol dispute between Iran and EU • Business barrierseg. Labour quality, worker unions and strikes • Cultural barrierseg. Bicycle preferrance in China Producers of 1/3 of the worlds bicycle. or Many vegetarians in India (steakhouse)

10. National Trade Agreements • The world trade organization (WTO) formed to reduce tariffs among member nations. The members account for over 97% of all world trade. • NAFTA Among NAFTA’s provisions are: • Tariff reductions • Elimination of nontariff barriers • Simplified border processing • Tougher health and safety standards

11. Conclusion Although there are no sure-fire rules for going global, small businesses that want to become successful international competitors should observe these guidelines: • Make yourself at home in all three of the world’s key markets: North America, Europe, and Asia. • Appeal to the similarities within the various regions in which you operate but recognize the differences in their specific cultures. • Develop new products for the world market. • Familiarize yourself with foreign customs and languages; constantly scan, clip, and build a file on other cultures: their lifestyles, values, customs, and business practices.

12. Conclusion (cont’d) • Learn to understand your customers from the perspective of their culture, not your own. • “Glocalize.” Make global decisions about products, markets, and management but allow local employees to make tactical decisions about packaging, advertising, and service. • Recruit and retain multicultural workers who can give your company meaningful insight into the intricacies of global markets. • Train employees to think globally, send them on international trips, and equip them with state-of-the-art communications technology. • Hire local managers to staff foreign offices and branches. • Do whatever seems best wherever it seems best, even if people at home lose jobs of responsibilities. • Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own.