The benefits of going international

a combination of general contraction or major cutbacks in size and costs to create a smaller and leaner company.
Another option popular with local companies is getting into international operations.
Planning is crucial when opening a marketing office, establishing a joint venture, setting up a manufacturing plant, or growing your business from an established offshore investment.
When making this decision it is important to make considerations of regular reports.
Recent reports suggest that export performance during the first half of this year remained sluggish with the country literally having a negative trade balance with all its trading partners.
Food for thought hey!
If you are the optimistic type, you might need to research further. Despite the liberalisation of trade in many businesses, be it manufacturing, services, several barriers still hamper internationalisation.
These include various restrictions on local ownership, rights of establishment, international payment transfers, mobility of personnel, technology transfer, trans-border data flow, procurement policies, the business scope of firms, and on the use of a firm’s name.
Several strategies have been researched on internationalisation one could try the following:
Exporting: This is shipping goods produced in the company’s home country to other countries for marketing.
It is a good way of minimising risk and experimenting specific products.
Licensing: This is where a company is engaged to manufacture a product or service, which has been designed by someone else and is protected by a patent in return for a fee.
Franchising: Where a company in most cases a shop or store chain can enter into a business arrangement under which it is allowed by another company to operate using its logo, trademark, product line and methods of operation in return for a fee (e.g. Spar)
The difference between licensing and franchising is that the former relates to the manufacturing component of a business while the later relates to the retail component.
Turnkey operations: Is where contracts for the construction of operating facilities are done in exchange for a fee.
The facilities are transferred to the host country when they are completed.
The customer is usually a government agency.
Joint venture: Companies often form joint ventures to combine the resources and expertise needed to develop new products or technologies.
It also enables a firm to enter a country that restricts foreign ownership. A corporation can enter another country with fewer assets at stake and thus lowering its risk.
Acquisition: Is a quick way to move into an international area by taking over another company already operating in that area.
Synergistic benefits can result if a company acquires a firm with strong complimentary product lines and a good distribution network.
Synergy concept means two businesses will generate more profits together than they could separately.
Green-field development: If a company does not want to purchase another company’s problems along with its assets it may choose green-field development (i.e. building its own manufacturing plant and distribution system).
It is expensive and complicated than acquisition but it allows a company to have more freedom in designing, choosing and hiring its workforce.
Production sharing: Is the process of combining higher labour skills and technology available in the developed countries with the lower-cost labour available in the developing countries.
Build, operate, transfer concept: The BOT concept is a variation of the turnkey operation.
The company operates the facility for a fixed period of time during which it earns back its investment plus a profit.
It turns the facility over to the government at a little or no cost to the host country.
Management contract: Offers a means through which a corporation may use some of its personnel to assist a firm in a host country for a specified fee and period of time.
It is commonly used when a host country expropriates part or all of a foreign owned company’s holding in the country.
It allows firms to continue to earn some income from its investment and keep the operations going until local management is trained.
Which ever way you try to do it, be cautious when pursuing the following:
Follow the leader: Sometimes such a strategy can work fine, but not without careful consideration of the company’s particular strengths and weaknesses.
The decision by Standard Oil of Ohio to follow Exxon and Mobil Oil into conglomerate diversification was disastrous.
Try to do everything: That is establishing many weak market positions instead of a few strong ones
Arms Race: Attacking the market leaders head-on without having either a good competitive advantage or adequate financial strength.
Such battles seldom produce a substantial change in market shares and the usual outcome is higher costs and profitless sales growth
Over-optimistic expansion: This entails using high debt to finance investments in new facilities and equipment, then getting trapped with high fixed costs when demand turns down, excess capacity appears, and cash flows are tight.
Unrealistic status-climbing: Going after the high end of the market without having the reputation to attract buyers looking for name brand and prestige.
Selling the sizzle without the steak: If you are spending more money on marketing and sales promotions to try to get around problems with product quality and performance this might pose serious problems for you.
Cosmetic product improvements are not a substitute for real innovation and extra customer value.
Quote of the Week
Remember the difference between ordinary and extraordinary is that little extra. — Jimmy Johnson.
May God richly bless you.