Last week I was asked to provide three key practice tips relating to global business. Not too much detail . . . just some basic thoughts that managers of small- and mid-sized companies looking to launch new business activities overseas might have in mind. I was given only a few minutes; however, I thought the following “results” of my thought process might be of value to you:
Opportunities have expanded rapidly in foreign markets, even for the smallest U.S. businesses; however, each new market has its own unique requirements with respect to product characteristics and distribution. As a result, domestic firms must develop, almost from the time that they first launch their business, the capability to differentiate existing products to meet the needs of foreign markets and must also understand the distribution channels in those markets. In order to be effective in these areas, firms must bring in foreign market specialists and should also look for legal advisors with experience and contacts in those countries that are likely to be first on the list for global expansion.
Improvements in communications have led to broad dissemination of advertising information, thereby influencing consumer tastes and preferences in foreign markets. U.S. businesses should be mindful that information on their products and brands will be available in foreign markets even before the firm is actively engaged in selling in those markets and it is important for counsel to understand foreign trademark laws and regulations pertaining to the content and form of advertising.
Companies now need an international business plan in addition to the plans they develop for launching activities in the U.S. In determining the contents of an international business plan, there are certain guidelines that should be followed to insure that necessary information is collected and all relevant issues are considered. While there are a variety of ways to organize an international business plan, it is generally useful to begin by describing the company’s current business, including activities already conducted outside of the U.S. , and the main products or services offered by the company. The next step is evaluating the company’s current position, both in the U.S. and within the broader global industries in which the company competes. This competitive analysis is crucial to determining the content of the balance of the international business plan. For example, if the analysis points to softening of the U.S. market for the company’s products, exporting strategies should be an important part of the action items in the international business plan along with the possibility of launching product development initiatives in foreign markets. Organizational changes should also be addressed in the plan since globalization generally requires a substantial shift of resources and management authority away from U.S. headquarters. Finally, as with any other business plan, the working group should expect to prepare budgets, schedules and tactical plans.