Article Contributed by Sonal Patil
Globalization is today’s buzz word. Many believe that if you expand a business globally you will make untold riches – it’s not that easy! There are many things you have to do before you can even consider going global with your business. Knowing how to go global is just one of these.
Sure, you may have a great product, or even range of products, that sell well in the USA, or Europe or even many parts of Asia. Will it sell outside of your own country? Is it possible for you to go global? Do you even know how to expand a business globally, even if globalization would suit your business?
Here are 4 very important aspects of globalization that you should consider when deciding to expand your business outside of your own country.
- Check Out Global Markets
What do you mean by ‘globalization’? Do you understand what it takes to expand a business globally? What are your global markets? Is there a worldwide market for your products, or would they sell only in specific countries? First, you must check out local products in your overseas market sector. Are the locals in these countries genuine competitors? Would you be able to compete and take the percentage of that market you need to profit?
Identify your potential local competitors and carry out a SWOT analysis on each of them. Can you compete against them at a profitable price? Keep in mind that you have to transport your product to their country – that costs money. Are there import taxes? Will it take you long to promote your product in a local market?
- Compile a Business Plan and Sales Strategy
Analyze what the local competition does to attract their market. Set up a business strategy including short-term, medium-term and long-term goals – and how to achieve them. Devise a means of measuring success – or lack of it! Determine whether your products are suitable for this market or if they have to be changed in some way to meet local preferences.
Do you need no more than a branch of your existing business to be set up abroad, or will you a completely new division to meet export needs? Perhaps your product will have to be changed for the new market. Maybe you will need local sales staff. Maybe there is a language issue, and your product has to be changed to meet that? Will Cyrillic, Arabic or Chinese characters be needed to match the product to the market?
- How to Go Global: Local Issues
Is your product compliant to local or even national government regulations? Certifications and various form of compliance can vary between areas in a country, not only between countries. Here are some of the issues that you could face should you decide to go global. They apply even if you try to export to one other country, let alone go global and try to sell worldwide.
- Health and Safety regulations: Make sure your product meets the needs of western H&S regulations. US and European regulations are strict, and if your product meets these then it should be OK for other markets.
- Testing Certification: Make sure you are aware of local quality standards, and that your products will meet these.
- Patent and Trade Mark Regulations: Some companies are known for breaching patent law and getting away with it in their own country. Make sure you have reviewed the patent or copyright situation for your products in the countries you want to do business with.
- Language Standards: Check that your products conform to language standards in other countries. Most accept English, but others require dual language marking on equipment; English plus their own. This is understandable, but can be costly to make products language-specific in certain countries.
- Logistics and Distribution: What are the distribution costs? What are the costs of getting your product to where it will be sold? In fact, who will sell these products? Your own subsidiary abroad, or a distributor already located in that country?
These are just some of the factors you will need to address if you intend to expand a business globally. Knowing how to go global is just as important as having the products to do so. Your product must be ready for globalization, but so must you and your company’s administration system.
- Legal Aspects of Globalization
So, you have done the market research and are confident your product will sell abroad. You can meet local and national regulations, and have a sales team set up to market your product in a number of countries. Keep in mind, globalization is not an American firm selling in the UK or in France. It is selling to a worldwide market.
You may need a legal team to ensure you are meeting all the legal aspects of globalization. You may need local commercial agreements, have to maintain corporate records to a specified standard and may also have to comply with a plethora of local and national regulations as explained earlier.
It usually pays exporting businesses to put these aspects of expanding a business globally into the hands of professionals. The same applies to the maintenance of financial and employment records. These can vary between countries, and a professional can make sure you do not default on any local law – with potentially disastrous results.
How to go Global: Conclusions
These are just a few of the more important globalization factors you must consider if you want to expand a business globally. They do not explain how to go global, but they will keep you on the right track. In fact, these points can be summarized in three words: employ a professional!