Some small companies never thought about going global, or in other words, becoming international retailers. They think of selling their products in foreign countries and think of ways to do so. Before you know it, they have become global marketers. Many companies know that by doing business in other countries, they can broaden their potential buyers. By selling to foreign customers, though, retailers are stumbling upon roadblocks. Selling their product in international markets is not the same as selling in the United States.
Retailers, especially small businesses with limited resources, are realizing large capital expenditures in order to accommodate sales in foreign markets. However, many companies are doing quite well in the international markets depending on their strategies. The resources, I based this paper on, talk about four different ways that small companies can use to sell their product in global markets successfully. The first method is to find a foreign distributor. By using a foreign distributor, the small company owner can get a hold on a market that is familiar to the distributor.
Otherwise, it would take an unfamiliar American a long time to do. The foreign distributor already knows the market so it easier for him/her to find buyers for the product. This is a low-cost and low-risk way to get your products sold in foreign countries. The distributor already has a relationship with the market in his/her country. They buy the products from the American owned company, provide the sales support and then sell it to the consumers. Companies need to be careful of which distributor they use; otherwise they may not make as many sales as they have the potential to do.
Foreign distributors need to be checked out thoroughly before you do business with them. The second method to going global is by forming a partnership or a joint venture. Depending on what type of business you are in, you can find similar companies in other countries and form a partnership. This gives the seller more recognition in the foreign country. But, it is usually more costly due to the added expense of another office. By forming a partnership with a company that is in the country you want to do business in, the partner possibly has a list of contacts, already.
This makes selling the product or service a lot easier. Still though, companies wanting to expand in foreign markets must be careful in choosing their partners. If they are not careful whom they choose as a partner, they could risk losing control of their product or service. And, they need to pay close attention to the day to day activities of selling. Some small businesses get too hasty because they want to expand their market and gross profit, so they make bad judgment calls when it comes to finding a company to form their joint venture with. The third method is by using a licensing agreement.
Basically, the foreign company/business buys the rights to the American product. They become the licensees. This would seem the simplest method, since the licensee, it seems, would sell the product then send you a check every month or so depending on the contract. However, you have to be careful of this strategy as well. Some licensees buy the product and then shove it back on the shelves so it wont compete with their product of the same nature. And if the contract is not worded just right, the licensee can do whatever they want with the product.
The American licensor no longer has any rights or say-so as to how the product is made or sold. The last and most costly method of going global is to go it alone. This is probably not going to be an option for small American companies. But if a large company does its homework, a foreign market can be very profitable. For instance, bicycle helmet producer, Giro Sport Design Inc. of Soquel, California, did extensive research on marketing their product in Europe before attempting to sell it there. They found out that France had more licensed competitive cyclists than the United States.
They visited parks in France and actually stopped cyclists to get their opinion on what they liked or disliked about bicycle helmets. This company finally decided to expand their business in Ireland. Every method of going global involves some risks. And like many entrepreneurs in the article state, it is a learning process. You cant guess at what kind of stumbling blocks you might run into. Every culture is different and what means one thing to an American may mean something totally different to a person in another country. Extensive research and development is the best way to go before jumping into the foreign market.
