Global Aspects of

Entrepreneurship

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
 Why Go Global?
 Offset sales declines in the domestic market.
 Increase sales and profits.
 Extend their 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.
 Why Go Global? (cont’d)
Before venturing into the global marketplace,
entrepreneurs should ask themselves six questions:
1. Is there a profitable market in which our firm has the
potential to be successful over the long run?
2. Do we have and are willing to commit adequate
resources of time, people, and capital to global
campaign?
3. Are we considering going global for the right reasons?
4. Do we understand the cultural differences, history,
economics, value systems, opportunities, and risks of
conducting business in the country (or countries) we
are considering?
5. Is there a viable exit strategy for our company if
conditions change or the new venture is not
successful?
6. Can we afford not to go global?
 Strategies for Going Global
 Creating a presence on the web
 Trade intermediaries
 Export management companies
 Export trading companies
 Manufacturer’s export agents
 Export merchants
 Resident buying offices
 Foreign distributors
 The value of using trade intermediaries
 Joint ventures
Strategies for Going Global (cont’d)
 International franchising
1. Identify the county or countries that are
best suited to the franchiser’s business
concept.
2. Generate leads for potential franchisees.
3. Select quality candidates.
4. Structure the franchise deal.
 Countertrading and bartering
 Foreign licensing
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.
 Strategies for Going Global (cont’d)
 Establishing international locations
 Importing and outsourcing
Entrepreneurs who are considering importing goods and service or
outsourcing their manufacturing to foreign countries should
follow these steps:
1. Make sure that importing or outsourcing is right for your
business.
2. Establish your target cost for your product.
3. Do your research before you leave home.
4. Be sensitive to cultural differences.
5. Do your groundwork.
6. Protect your company’s intellectual property.
7. Select a manufacturer.
8. Provide an exact model of the product you want manufactured.
9. Stay in constant contact with the manufacturer and try to build
a long-term relationship.
 Barriers to International Trade
 Domestic barriers
 International barriers
 Tariff barriers
 Nontariff barriers
 Quotas
 Embargoes
 Dumping
 Political barriers
 Business barriers
 Cultural barriers
 National Trade Agreements
 The world trade organization (WTO)
 NAFTA
Among NAFTA’s provisions are:
 Tariff reductions

 Elimination of nontariff barriers

 Simplified border processing

 Tougher health and safety standards

 Central america free trade agreement

(CAFTA)
 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.
 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.