Direct Marketing, Mail Order, and E-commerce News from the National Mail Order Association
Going Global for Profits - Growth Opportunities For Small
and Mid-Sized Businesses
By: Ayse Oge
Today's evolutionary technology allows us to live in an integrated, interdependent and interconnected world. It creates enormous opportunities for small and mid-sized companies to compete and thrive in international markets. Small businesses have the advantage of being flexible, creative, ingenious and innovative. Since they are not cluttered with the layers of bureaucracy that their larger counterparts have, they move quickly through the decision-making process. The playing field in the international arena is leveled for small businesses to take the plunge-it lets them achieve growth and expansion and finally sharpen the competitive spirit of their owners and managers.
The U.S. Department of Commerce estimates that 95% of the world's population lives outside the U.S., and that two thirds of the world's purchasing power is located overseas. These statistics indicate that if a company is serious about competing and growing, it cannot ignore the international marketplace. The fact is, the longer you're out of world markets, the more opportunities you lose and the more opportunities you give to your local and foreign competitors.
Some of the Incentives for Going Global are:
* Building sales and profits.
When a company faces depressed sales in the local market, international markets can pick up the slack on low sales and achieve stability in revenues of the small business. Export managers know this well. As one Vice President who is involved in International Trade of a company, the leading supplier of material and equipment for cast polymer production based in Valencia, California indicated: "We would be out of business if we had not gone global when the domestic market was extremely slow." He says, "Sales are sales regardless where they are coming from". Export can help companies generate additional revenue in domestic downturns as well as during seasonal off-periods. For example, U.S. manufacturers of summer goods may do well in Australia during their summer period which coincides with our winter period. Counter marketing can even help out revenues and profits.
* Gaining competitive knowledge and ideas.
Your presence in the overseas markets can also provide you with invaluable competitive information and know-how. The vast majority of U.S. exporters are using their international operations as incubators for the next big hit. As the world is shrinking-the interchange and exchange of ideas are accelerated. Companies are reorganizing so that hot products from one region of the world can be more readily spotted and shipped elsewhere-either to U.S. or other international markets.
* Achieving economies of scale.
When the demand increases by exports, a business can spread the fixed costs over a larger base of production. This will help them to reduce its unit costs and contribute to more profits.
* Taking advantage of world niche markets.
Value-added niche products are very popular in world markets. Global consumers are looking for products that display performance, an appealing image and higher quality. Kenichi Ohmae, prominent globalization expert, indicates in his book "Going Global" that "When people make over $20,000 annual income, consumers purchasing habits, spending patterns are the same all over the world." Small businesses have a knack for filling these niches because they are flexible and have an extraordinary innovative advantage to produce products with speed. The enormous proliferation of microbreweries is a good example of niche marketing. People want a stronger, more particular flavor in their beer and are prepared to pay for it.
Niche products can be marketed as new or unique. What is new may be a twist on an old theme; as long as the idea is clearly attractive to the target audience, you are a winner. On the other hand, a brand-new product that does not fill a need in the global marketplace has very little chance to succeed, because novelty alone is not sufficient to drive sales.
For many small companies, the important question is not whether, but how, to go global-that is, how to survive and prosper outside the narrow confines of a deceptively comfortable and familiar domestic market. Exports provide small and mid-sized companies tremendous edge in weathering local challenges and get them to growth path in generating additional revenues.
About the Author:
Ayse Oge, President of Ultimate Trade, International Trade Consulting, Speaking and Training. She is Author of two books, Go Global to Win and Global Business Guide. Her website is: http://www.goglobaltowin.com She can be reached at: firstname.lastname@example.org
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