scarb eesbm6e ppt_15

Copyright © 2011Pearson Education, Inc. Publishing as Prentice Hall

Global Aspects ofGlobal Aspects ofEntrepreneurshipEntrepreneurship

Global Aspects ofGlobal Aspects ofEntrepreneurshipEntrepreneurship

CHAPTER CHAPTER 1515

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 2Ch. 15: The Global Aspects of Entrepreneurship

Why “Go Global?”Why “Go Global?”

Offset sales declines in the domestic marketOffset sales declines in the domestic market Increase sales and profitsIncrease sales and profits Extend products’ life cyclesExtend products’ life cycles Lower manufacturing costsLower manufacturing costs Lower product costLower product cost Improve competitive positionImprove competitive position Raise quality levelsRaise quality levels Become more customer-orientedBecome more customer-oriented

In addition to the text

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 15: The Global Aspects of Entrepreneurship

Nine Strategies for Going GlobalNine Strategies for Going Global

Creating a Web Site

Relying on Trade Intermediaries

Creating Joint Ventures

Foreign Licensing

International Franchising

Countertrading & Bartering

Exporting

Establishing International Locations

Importing &Outsourcing

15 - 3

FIGURE 15.1


Strategies For “Going Global”Strategies For “Going Global”

Create a presence on the WebCreate a presence on the Web


Asia41.2%

15 - 5


The Web’s Global ReachThe Web’s Global Reach

Available 24 hours a day to anyone Available 24 hours a day to anyone anywhere in the world.anywhere in the world.

1.60 billion Web users worldwide1.60 billion Web users worldwide 220 million in U.S.220 million in U.S. Nearly 1.4 billion in other countriesNearly 1.4 billion in other countries

Customers who live outside the U.S. Customers who live outside the U.S. account for more than 50% of all online account for more than 50% of all online sales by U.S. companiessales by U.S. companies

54% of eBay transactions take place 54% of eBay transactions take place outside the U.S.outside the U.S.


Create a presence on the WebCreate a presence on the Web

Rely on trade intermediariesRely on trade intermediaries

Strategies For “Going Global”Strategies For “Going Global”(continued)(continued)


Trade IntermediariesTrade Intermediaries Domestic agencies that serve as Domestic agencies that serve as

distributors in foreign countries for distributors in foreign countries for companies of all sizes.companies of all sizes.

Types of intermediaries:Types of intermediaries: Export Management Companies (EMCs)Export Management Companies (EMCs) Export Trading Companies (ETCs)Export Trading Companies (ETCs) Manufacturer’s Export Agents (MEAs)Manufacturer’s Export Agents (MEAs) Export merchantsExport merchants Resident buying officesResident buying offices Foreign distributorsForeign distributors



Create a presence on the Web Create a presence on the Web

Rely on trade intermediariesRely on trade intermediaries

Form joint venturesForm joint ventures

(continued)(continued)


Joint VenturesJoint Ventures Domestic joint venture Domestic joint venture – two or more U.S. – two or more U.S.

companies form an alliance for the companies form an alliance for the purpose of exporting their goods and purpose of exporting their goods and services abroad.services abroad.

Foreign joint venture Foreign joint venture – a domestic firm – a domestic firm forms an alliance with a company in the forms an alliance with a company in the target nation. target nation.

Most important ingredient: Most important ingredient: Choosing the right partner.Choosing the right partner.

Use the joint venture as a Use the joint venture as a learning process.learning process.



Create a presence on the WebCreate a presence on the Web Rely on trade intermediariesRely on trade intermediaries Form joint venturesForm joint ventures Engage in foreign licensingEngage in foreign licensing Consider international franchising Consider international franchising



International FranchisingInternational Franchising To expand internationally, franchisers To expand internationally, franchisers

should:should:1.1. Identify the country or countries that are best Identify the country or countries that are best

suited to the franchiser’s business concept.suited to the franchiser’s business concept.

2.2. Generate leads for potential franchisees.Generate leads for potential franchisees.

3.3. Select quality candidates.Select quality candidates.

4.4. Structure the franchise deal.Structure the franchise deal. Direct franchisingDirect franchising Area developmentArea development Master franchisingMaster franchising



Create a presence on the WebCreate a presence on the Web Rely on trade intermediariesRely on trade intermediaries Form joint venturesForm joint ventures Engage in foreign licensingEngage in foreign licensing Consider international franchisingConsider international franchising Use countertrading and barteringUse countertrading and bartering Export Export



ExportingExporting

Small business accounts for 90.7% of all Small business accounts for 90.7% of all companies involved in exporting, but they companies involved in exporting, but they generate just 21% of the dollar generate just 21% of the dollar value of the nation’s exports. value of the nation’s exports.

Significant impact: Small companies Significant impact: Small companies generate $1.1 billion each day in export generate $1.1 billion each day in export sales! sales!


1.1. Recognize that even the tiniest companies Recognize that even the tiniest companies and least experienced entrepreneurs have and least experienced entrepreneurs have the potential to export.the potential to export.

2.2. Analyze your product or service.Analyze your product or service.

3.3. Analyze your commitment to developing Analyze your commitment to developing export markets.export markets.

4.4. Research potential markets and pick your Research potential markets and pick your target.target.

Steps to Successful ExportingSteps to Successful Exporting


FIGURE 15.4 Small Business Exports: Number of Countries to Which Small Companies Export

15 - 17


Steps to Successful ExportingSteps to Successful Exporting

5. 5. Develop a distribution strategy.Develop a distribution strategy.

6. 6. Find your customer.Find your customer.

U.S. Department of CommerceU.S. Department of Commerce

International Trade AdministrationInternational Trade Administration

7. 7. Find financing for export sales.Find financing for export sales.

8. 8. Ship your goods.Ship your goods.

9. 9. Collect your money.Collect your money.


Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

FIGURE 15.5 How a Letter of Credit Works



Establish a presence on the WebEstablish a presence on the Web Rely on trade intermediariesRely on trade intermediaries Form joint venturesForm joint ventures Engage in foreign licensingEngage in foreign licensing Consider international franchisingConsider international franchising Use countertrading and barteringUse countertrading and bartering Export Export Establish international locations Establish international locations Use importing and outsourcingUse importing and outsourcing


Steps to Successful Steps to Successful Importing or OutsourcingImporting or Outsourcing

Make sure that importing or outsourcing Make sure that importing or outsourcing is right for your business.is right for your business.

Establish a target cost for your product.Establish a target cost for your product. Do your research before you leave Do your research before you leave

home.home. Be sensitive to cultural differences. Be sensitive to cultural differences. Do your groundwork.Do your groundwork.


Steps to Successful Steps to Successful Importing or OutsourcingImporting or Outsourcing

Protect your company’s intellectual Protect your company’s intellectual property. property.

Select a manufacturer.Select a manufacturer.

Provide an exact model of the product Provide an exact model of the product you want manufactured.you want manufactured.

Stay in constant contact with Stay in constant contact with the manufacturer and try to the manufacturer and try to build a long-term relationship. build a long-term relationship.



Barriers To International TradeBarriers To International Trade

Domestic BarriersDomestic Barriers Government imposed barriers.Government imposed barriers.

Attitude: “My company is too small Attitude: “My company is too small to export.”to export.”

Lack of information about Lack of information about how to get started.how to get started.


International BarriersInternational Barriers Tariff – A tax a government imposes on Tariff – A tax a government imposes on

goods and services imported into that goods and services imported into that country.country.

Nontariff barriers – Governments that Nontariff barriers – Governments that protect domestic industriesprotect domestic industries

QuotasQuotas - Limits on the amount of a - Limits on the amount of a product imported into a country.product imported into a country.




International BarriersInternational Barriers Embargo - Total ban on imports of Embargo - Total ban on imports of

certain productscertain products. .

Dumping - Selling large quantities of a Dumping - Selling large quantities of a product in a foreign country below cost product in a foreign country below cost to gain market share.to gain market share.

(continued)



International BarriersInternational Barriers Political barriersPolitical barriers - Rules, regulations and - Rules, regulations and

political risks.political risks.

Business barriers – Different cost Business barriers – Different cost structures and business practices.structures and business practices.

Cultural barriersCultural barriers - Differing languages, - Differing languages, philosophies, traditions, philosophies, traditions, and accepted practices.and accepted practices.

(continued)


International Trade International Trade AgreementsAgreements

Major Agreements:Major Agreements: World Trade Organization (WTO)World Trade Organization (WTO)

North American Free Trade North American Free Trade Agreement (NAFTA)Agreement (NAFTA)

Dominican Republic - Central Dominican Republic - Central America Free Trade Agreement America Free Trade Agreement (CAFTA-DR)(CAFTA-DR)


Guidelines For Success In Guidelines For Success In International MarketsInternational Markets

Take time to learn before jumping in. Take time to learn before jumping in.

Seek out assistance from professionals. Seek out assistance from professionals.

Make yourself at home in all three of the world’s Make yourself at home in all three of the world’s key markets - North America, Europe, and Asia.key markets - North America, Europe, and Asia.

Appeal to the similarities in the various regions Appeal to the similarities in the various regions and recognize the differences in local cultures. and recognize the differences in local cultures.

Develop new products for the world market.Develop new products for the world market.

Learn foreign customs and languages.Learn foreign customs and languages.


““Glocalize” - make global decisions about Glocalize” - make global decisions about products, markets, and management and allow products, markets, and management and allow local employees to make tactical decisions. local employees to make tactical decisions.

Recruit and retain multicultural workers.Recruit and retain multicultural workers. Train employees to think globally.Train employees to think globally. Hire local managers to staff foreign offices and Hire local managers to staff foreign offices and

branches.branches. Do whatever seems best wherever it seems best.Do whatever seems best wherever it seems best. Consider using partners and joint ventures to Consider using partners and joint ventures to

break into foreign markets.break into foreign markets.

Guidelines For Success InGuidelines For Success InInternational MarketsInternational Markets

(continued)


Global effectiveness requires Global effectiveness requires entrepreneurs to:entrepreneurs to:

Learn about the global marketLearn about the global market Seek the assistance of professionalsSeek the assistance of professionals Recruit and train employees to think Recruit and train employees to think

globallyglobally Consider using partners Consider using partners

and joint venturesand joint ventures Determine which opportunities best fit Determine which opportunities best fit

your company your company

ConclusionConclusion


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of

the publisher. Printed in the United States of America.

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