Global thinking” is important because today’s consumers can select products, ideas and services from many nations and cultures. Both international and domestic entrepreneurs alike are concerned with sales, costs and profits the difference between the two is the variation in the relative importance of the factors affecting each decision. International entrepreneurial decisions are more complex due to such uncontrollable factors as economics, politics, culture and technology.
There are a many of factors that will affect an entrepreneurs decision to go international. These include:
Political- Legal environment
Cultural Environment
Technological Environment
Strategic Issues
Economic Environment
Why go global?
Offset sales declines in the domestic market
Increase sales and profits
Extend products’ life cycles
Lower manufacturing costs
Improve competitive position
Raise quality levels
Become more customer-oriented
How can an entrepreneur go global?
The entrepreneur can actively engage in the international market in several ways:
Importing
Importing is buying and shipping foreign-produced goods for domestic consumption. How does an entrepreneur become aware of import opportunities? One way is to attend trade shows and fairs where firms gather to display their products and services. Another way is to monitor trade publications.Often, firms will advertise in trade publications to make themselves known to potential customers.
Exporting
Exporting is the shipping of a domestically produced good to a foreign destination for consumption. Exporting is important for entrepreneurs because it often means increased market potential. There are two types of exporting;
Indirect Exporting-This involves having a foreign purchaser in the local market or using an export management firm.
Direct Exporting- This involves selling goods to another country by taking care of the transaction yourself. Direct exporting does not involve any firms or middlemen.
Licensing
Licensing is a business arrangement in which the manufacturer of a product (or a firm with proprietary rights over certain technology or trademarks) grants permission to some other group or individual to manufacture that product in return for specified royalties or other payments.
Foreign licensing covers myriad contractual arrangements in which the business (licenser) provides patents, trademarks, manufacturing expertise, or technical services to a foreign business (licensee)
Management Contracts
Several entrepreneurs have successfully entered international business by contracting their management techniques and skills.
Joint Venture
A joint venture occurs when two or more firms analyze the benefits of creating a relationship, pool their resources, and create a new entity to undertake productive economic activity.
Mergers
This is where two companies come together to form one entity. The two businesses become one and ownership and managment structure changes to accommodate the new members.
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