International
Impacts of International business …..
Export diagnosis: evaluate your international potential
If a company intends to work internationally, it will have huge impact on the financial aspect and
working method of your company.
- Hiring qualified staff..
The rentability itself will occur only on the middle or long term.
- Commercial criteria : a low margin on the domestic market will not enable the company to
absorb the export costs. The brand and its international protection, the aftersales obligations,
stock management will generate constraints.
- Regulatory criterias : conformity to international norms, some specific costs due to the product
type like food or pharmaceuticals products.
The organization management techniques will have to be observed
- Sales dynamism: increase rate, average response time to customers, renewal rate of the
customers or the range.
Working internationally requires competences linked to the cultural specificities, language skills,
legal and sales skills for export markets.
Local manufacturing logic: requires technology transfer, more expensive. Generally used in
countries which are far geographically speaking.
Financing…..
Financial sources of the export subsidiaries
If you already have existing operations that generate positive cash flow, this is the best option to
use. It will decrease the dividends to the shareholders, who will use this as a further investment.
The risk of waiting for excess cash flow is that it will not come as soon as you expect, and that
you will loose market opportunities, since competitors may step in.
In general banks are reluctant to finance a single market entry, unless the company has already
proven to be successful in other similar markets. But even then a bank will always search for
certainties, which is inherent to the relatively low risk premium they charge as part of their
interest.
Subsidies and government financing
Various government try to stimulate exports and international expansion and have arrangement
for this.
Subsidies are in general the best option to reduce your costs.
They may range from 30 to 70% of various parts of the costs that you make.
- Singapore the most generous nations with 70% reimbursement of your cost for market
research and for business matchmaking.
- Australia goes up to 50%, just as The Netherlands also the UK and the US have subsidy
arrangement.
Guarantees : with a government guarantee you can take a loan with a bank, but in case you
can’t pay it back the government will stand in for you. It is important to understand the exact
conditions for the guarantee, because in general it is not unlimited.
Investors for companies that want to expand to their first or second foreign market, this may be
an essential step in the company development.
Showing that you can also sell your products or services abroad proves the scalability of your
concept, which can add a lot of shareholder value to companies that are based in a smaller
country.
Mostly for these rounds investors are very critical on the information that you provide, so here is
certainly the need to come up with extensive market research and a good plan.
Crowdfunding
Crowdfunding is a way of finding many small investors instead of one or more large ones.
Crowdfunding can be done as pre-ordering, as a loan or as equity.
Presentation …..
• Exporting involves marketing the products you produce in the countries in which you intend to
sell them.
• Some companies use direct exporting, in which they sell the product they manufacture in
international markets without third-party involvement.
• asking other businesses whether you can add your product to their overseas inventory.
• If your company and an international company agree to this arrangement, both parties share
the profit for each sale. Your company can also manage the risk of selling overseas by allowing
its partner to handle international marketing while your company focuses on domestic retail.
• common form of indirect international marketing.
• Countertrading functions as a barter system in which companies trade each other's goods
instead of offering their products for purchase.
• This means companies may solve problems like ensuring other companies understand the
value of their products and attempting to acquire goods at a similar level of quality.
• cost-effective choice for many businesses because the practice may exempt them from import
quotas.
Licensing
• occurs when one company transfers the right to use or sell a product to another company.
• this method may be choosen if it has a product that's in demand and the company to which it
plans to license the product has a large market.
• Example: a movie production company may sell a school supply company the right to use
images of movie characters on backpacks, lunchboxes and notebooks.
Joint ventures
• attempt to minimize the risk of entering an international market by creating joint ventures with
other companies that plan to sell in the global marketplace.
• This market entry strategy carries the risk of an imbalance in company involvement, but both
parties can work together to establish fair processes and help prevent this issue.
Investment X%Investment Y%• 6.
• Will give your organization credibility as a local business, which can help boost sales.
• Company ownership costs more than most market entry strategies, but it has the potential to
lead to a high ROI.
• 7.
• Chain retail company in which an individual or group buyer pays for the right to manage
company branches on the company's behalf.
• requires strong brand recognition, as consumers in your target market should know what you
offer and have a desire to purchase it.
• For well-known brands, franchising offers companies a way to earn a profit while taking an
indirect management approach.
• involve buying the land and resources to build a facility internationally and hiring a staff to run
it.
• These investments typically benefit large, established organizations as opposed to new
enterprises.
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