Expanding Business Internationally
Exporting your products directly into the international market is the way to expand your business abroad.
Furthermore, knowing other options like joint ventures, licensing, or offshore operations is definitely a great idea.
Why Expand Business Internationally?
- To increase sales and profits
- To improve domestic competitiveness and find much cheaper suppliers
- To gain international market share
- To reduce dependence on the existing suppliers and markets
- To extend greatly the sales potential of the existing products or services with relatively low costs on the development of it
- To stabilize cynical or seasonal market fluctuations
- To improve the potential of corporate expansion
So, in order to join in the international trading, your business needs to incur some extra costs like the development of new promotional materials, modification of the products to meet the exact needs of the new market, travel on foreign locations, as well as the overseas shipment. Thus, deciding to embark on the international trade must be done with both eyes widely open.
What to Choose? – Distributor or Direct?
The company must decide whether they will do the international trade directly or just work through distributors.
- Using Distributors
In the foreign market, keep in mind that what can be working excellently in one place will not be working excellently in another. For example, if your business is profiting greatly in Europe, it may not be getting the same hype in Japan. So, if you are about to enter the Japan market, then you will need to choose several distributors for your business.
Japan is not that receptive to other countries since the Japanese patronize greatly their own products. Of course, their language is also an additional barrier for communicating with them and selling to them. If you will do business there, there is really a lot to learn so directly selling can be very expensive.
Thus, to do business in Japan, you may hire American consultant who can suggest potential resellers. The consultant will be receiving a certain percentage of the distributor’s generated revenue.
- Selling Directly
On the other hand, in Europe where the business gets real attention, there is definitely an easy decision. The product may requires a lot of support so if you hire a distributor, you will not be sure that they will provide the best care for your customers. Thus, it is best to sell directly there.
You may hire few people first and when the revenue increases, you can add more employees. In this way, the financial risk can be minimized. You can ensure good cash flow and can pay for your expansion. This strategy will definitely work as there are minimal learning required and people are more open to changes and other brand of products.