Export Management - 10 Key Considerations for Going Global

The increasing trend of globalization has opened up new markets for small businesses. Companies throughout the U.S. and other countries have gained international exposure and increased profits, particularly through exporting. In fact, the U.S. Small Business Administration (SBA) reports that small businesses represent 96% of all exporters of goods for 2005.

In terms of going global, two principal strategies are now commonly used: establishing a relationship with a business or individual overseas, and developing a web presence that makes products and services available worldwide.

There are no hard-and-fast rules as to which businesses should go global; however, making the decision requires careful assessment of the advantages and disadvantages of expanding into new markets. The following checklist highlights issues worth considering before you move your business into international markets.

1. Quality of your product--To ensure success abroad, your product should be high quality and distinctive. It’s tough to sell cheap merchandise abroad, particularly if your products can be cheaply produced in-market. The harder your product is to make, the harder it will be for copies to be made illegally in international markets, and the easier it will be to spot fakes.

2. Flexibility and change in mindset--Selling internationally means catering to the needs and tastes of people whose cultures and tastes differ from yours. You need to avoid issues regarding the cultural taboos and sensitivities of your new market. Evaluate the differences carefully.Make sure your product name can cross cultural barriers without changing the message that your product is trying to convey.

3. Language barriers--To effectively market your product, you need to be able to convey the same value and meaning to your consumer. You have to be able to translate brochures and product manuals into foreign languages. Be thorough in providing instructions; translation errors may be costly and you might also be liable if you make errors in providing product or service information. If you are providing a video in English, be aware that although you may be selling to English-speaking markets, different regions may interpret your text and dialogues different ways.

4. Product acceptability--What works in the domestic market may not work for other markets. Sometimes, you may even need to revise your product to suit the climate and setting of your new market. If you intend to sell electronic products, for example, you need to make sure that they are suitable for electrical current differentiations abroad, as well as video standards.

5. Product name--Cultural sensitivity includes ensuring acceptable product names. Some names may have unfavorable meanings or connotations in other countries. Check if your logo contains characters that may not be considered acceptable (remember Nike’s gaffe in marketing to Arab nations, where its swoosh logo resembles the Arabic word for God?).

6. Level of commitment--Clarify your commitment to international trade and your reasons for exporting. You also have to have immeasurable patience, since preparations and clearances can take many months before you can make a single initial shipment.

7. Organizational structure--Your organizational structure needs to have mechanisms to seek out buyers and importers for your products. You also need to ensure multinational legal compliance (labeling, packaging, product safety and liability laws, etc.). An alternative would be to hire an export management company to help you gain instant access to foreign market knowledge and export know-how.

8. Additional costs--Expect to pay additional costs, particularly for product modifications and extra production costs. You will also need translation services for your sales personnel and translation of your promotional materials. You can also face greatly expanded telephone and other communication bills, plus travel costs for visiting the countries in which you plan to market your products.

9. Pricing--An important consideration is whether you can sell at a competitive price abroad. Acceptable price differentials in the domestic market may not hold true in other countries. Carefully consider the foreign exchange market and its volatility. Given the potential instability of a new market’s currency, your products may be priced too high or too low.

10. Degree of competition--A more careful analysis of your market is needed to determine who your competitors are. The number of exporters providing the same product or a similar product to the same market is a good indication of the demand for your business.

Finally, there are countries where you simply can’t ship goods, such as Iran, Iraq, Libya, Serbia, Sudan, North Korea and Cuba. In some cases, U.S. Export Administration Regulations (EAR) require an export license for shipments to any country in the world. To learn more about the countries that are subject to embargoes or other special controls, please visit the EAR website.

Going global may offer tremendous market potential for certain companies; however, be prepared to do additional research and incur preparatory expenses necessary for developing and implementing an international business plan. A successful strategy may be to employ an export management company to handle international sales. Often, these companies not only provide a valuable support system, but also know the ins and outs of the markets and have strong ties to international companies. In many markets, companies trust their long-term suppliers, so market penetration can be limited unless a known supplier approaches them with a new product or service.