Risks in International Business

August 6, 2008 at 10:28 am · Filed under business tips ·Tagged , , , , , , , , , , , , , , , , , , , , ,

Just as there are reasons to get into global markets, and benefits from global markets, there are also risks involved in locating companies in certain countries. Each country may have its potentials; it also has its woes that are associated with doing business with major companies. Some of the rogue countries may have all the natural minerals but the risks involved in doing business in those countries exceed the benefits. Some of the risks in international business are:

(1) Strategic Risk
(2) Operational Risk
(3) Political Risk
(4) Country Risk
(5) Technological Risk
(6) Environmental Risk
(7) Economic Risk
( 8) Financial Risk
(9) Terrorism Risk

Strategic Risk: The ability of a firm to make a strategic decision in order to respond to the forces that are a source of risk. These forces also impact the competiveness of a firm. Porter defines them as: threat of new entrants in the industry, threat of substitute goods and services, intensity of competition within the industry, bargaining power of suppliers, and bargaining power of consumers.

Operational Risk: This is caused by the assets and financial capital that aid in the day-to-day business operations. The breakdown of machineries, supply and demand of the resources and products, shortfall of the goods and services, lack of perfect logistic and inventory will lead to inefficiency of production. By controlling costs, unnecessary waste will be reduced, and the process improvement may enhance the lead-time, reduce variance and contribute to efficiency in globalization.

Political Risk: The political actions and instability may make it difficult for companies to operate efficiently in these countries due to negative publicity and impact created by individuals in the top government. A firm cannot effectively operate to its full capacity in order to maximize profit in such an unstable country’s political turbulence. A new and hostile government may replace the friendly one, and hence expropriate foreign assets.

Country Risk: The culture or the instability of a country may create risks that may make it difficult for multinational companies to operate safely, effectively, and efficiently. Some of the country risks come from the governments’ policies, economic conditions, security factors, and political conditions. Solving one of these problems without all of the problems (aggregate) together will not be enough in mitigating the country risk.

Technological Risk: Lack of security in electronic transactions, the cost of developing new technology, and the fact that these new technology may fail, and when all of these are coupled with the outdated existing technology, the result may create a dangerous effect in doing business in the international arena.

Environmental Risk: Air, water, and environmental pollution may affect the health of the citizens, and lead to public outcry of the citizens. These problems may also lead to damaging the reputation of the companies that do business in that area.

Economic Risk: This comes from the inability of a country to meet its financial obligations. The changing of foreign-investment or/and domestic fiscal or monetary policies. The effect of exchange-rate and interest rate make it difficult to conduct international business.

Financial Risk: This area is affected by the currency exchange rate, government flexibility in allowing the firms to repatriate profits or funds outside the country. The devaluation and inflation will also impact the firm’s ability to operate at an efficient capacity and still be stable. Most countries make it difficult for foreign firms to repatriate funds thus forcing these firms to invest its funds at a less optimal level. Sometimes, firms’ assets are confiscated and that contributes to financial losses.

Terrorism Risk: These are attacks that may stem from lack of hope; confidence; differences in culture and religious philosophy, and/or merely hate of companies by citizens of host countries. It leads to potential hostile attitudes, sabotage of foreign companies and/or kidnapping of the employers and employees. Such frustrating situations make it difficult to operate in these countries.

Although the benefits in international business exceed the risks, firms should take a risk assessment of each country and to also include intellectual property, red tape and corruption, human resource restrictions, and ownership restrictions in the analysis, in order to consider all risks involved before venturing into any of the countries.

Dr. Sidney Okolo is a professor, consultant, strategist, and Africa expert. He is affiliated to several universities, the Managing Director of International Business Associates, a management consulting firm, and also the CEO of Global Education Support, an education assistance program.

Among other things, he engages in all aspects of learning, knowledge, organization and human change. His focus is on leadership, management, entrepreneurship, profit engineering, human potential, excellence, achievement, business strategy, research and development. Product management, change management, conflict management, athlete management, marketing, business development and operations. He works with clients to adapt to change due to change in factors of production, technology, goods and services. He engages clients in training, retraining, development, skills enhancement, association, behavior modification, ways of thinking, and attitude adjustment. In addition to his work in the United States, his focus is also on developing countries in the continent of Africa, their leadership, culture, economic and market structure, community planning and development, and his created four letter word, “PIES”, which stands for: poverty, instability, ethnicity, and sectarianism.

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Best Tips For More Successful Business Communication

July 14, 2008 at 10:08 am · Filed under business tips ·Tagged , , ,

The Internet has made it mutually easier as well as harder for people to converse. It is nowadays easier than ever to mail written messages; all it requires is the click of a key. However lots of citizens would rather mail off a fast email than receiving the telephone that means new people than ever are situating even their rapid, informal business communication in letters. If lettering is not your powerful point, you might not be conversing with colleagues, consumers, as well as partners as successfully as you might be.

Here are some tips to build your business communication ability improved:

  1. Don’t strike the send button just when you are finish writing. After writing the content check for any mistakes or any negative feeling and after 1-2 hours give it a fresh look and then send it.
  2. Maintain the tone positive. Prior to sending out your electronic mail, study it over cautiously to make certain your letter is not excessively negative.
  3. Note down in Microsoft Word primarily. If you have trouble with spelling, note down your messages in Microsoft Word primarily to obtain benefit of its Spell Check characteristic.
  4. Split it up. It will craft it easier for person who reads to recognize your point.
  5. Don’t be excessively informal. The Internet has offered increase to a lot of informal acronyms as well as shortenings of terms, like ur for your as well as u for you. Keep away from these at all expenses in business communications. They are too informal for a business atmosphere.

Each email as well as communication you mail doesn’t have to be an effort of mastermind. However it does must to be understood simply. Utilize these tips, and your company communication is in no doubt to develop.

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Understanding the Importance of International Business

July 9, 2008 at 12:12 pm · Filed under business tips ·Tagged , , , , ,

International business is all business transactions-private and governmental-that involve two or more countries. Why should one be interested in studying international business? The simplest answer is that international business comprises a large and growing portion of the world’s total business. Today, almost all companies, large or small, are affected by global events and competition because most sell output to and/or secure suppliers from foreign countries and/or compete against products and services that come from abroad.

More companies that engage in some form of international business are involved in exporting and importing than in any other type of business transaction. Many of the international business experts argue that exporting is a logical process with a natural structure, which can be viewed primarily as a method of understanding the target country’s environment, using the appropriate marketing mix, developing a marketing plan based upon the use of the mix, implementing a plan through a strategy and finally, using a control method to ensure the strategy is adhered to. This exporting process is reviewed and evaluated regularly and modifications are made to the use of the mix, to take account of market changes impacting upon competitiveness. This view seems to suggest that much of the international business theory related to enterprises, which are internationally based and have global ambitions, does often change depending on the special requirements of each country.

Another core issue is the company’s growth and the importance of networking and interaction. This view looks at the way in which companies and organisations interact and consequently network with each other to gain commercial advantage in world markets. The network can be using similar subcontractors or components, sharing research and development costs or operating within the same governmental framework. Clearly, when businesses formulate a trading block with no internal barriers they are actually creating their own networks. Collaborations in aerospace, vehicle manufactures and engineering have all sponsored the development of a country’s or a group of countries’ outlook based on their own internal market network. This network and interaction approach to internationalisation shows the substance of being able to influence decisions when knowing how the global network players work or interact.

For example, a crucial market network is that of the Middle East. Middle East countries are rich, diverse markets, with a vibrant and varied cultural heritage. This means that although there has been a harmonisation process during the past few years, differences still exist. Rather than business being simpler as a result, it should be recognised that because of regulations and the need those countries have to restructure as they enter the global market, performing any kind of business can be highly complex. It should be remembered though that the Middle-Eastern countries have a low-income average and like to have their cultural differences recognised. Those firms that will or have recognised these facts have a good chance of developing a successful marketing strategy to meet their needs. Fortunately some firms have realised these important differences and reacted adequately when strategic decisions had to be made regarding their penetration to this kind of markets.

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The Essential International Marketer Perspective - Why Use International Internet Marketing?

June 29, 2008 at 8:02 am · Filed under business tips ·Tagged , , , , , , , , , , , , , , , , ,

The most important part of modern business strategy is to think on a global scale, however this doesn’t mean that businesses can afford to ignore their local market. The world is continually changing. The most noticeable change is perhaps in the way businesses operate; over the past few decades this has changed considerably. Businesses are able to operate on an international scale fairly easily, but that doesn’t mean that they can lose touch with their local customers. Consumers and businesses can buy any product from anywhere in the world thanks to the internet. Top business strategies include multilingual website marketing and International internet marketing.

Competing on an International Level

It can be quite difficult for firms to start competing at an international level. An international marketing strategy has to be developed depending on the products and services which the business intends to offer to their customers. It is also important for businesses to realize what their long term goals are when creating these strategies. There is very little point for a company to target their domestic market on a few short term goals. Most firms will be targeting the global market and to be competitive you should also target compatible markets firstly and those with greatest cultural differences lastly. This means you need to find out the preferences of all of these markets, this will require a well founded research.

When you select your international marketing strategy then it is certainly a good idea, however that doesn’t mean to say that it is risk free. You should select a common strategy which saves you a lot of hassle. A common strategy will mean that you don’t have to develop strategies for individual markets. International marketing strategies are becoming increasingly important in many businesses all around the globe.

Firms which utilize international internet marketing to the best of their ability have a very good chance of making high levels of profit. It is true that the proportion of products sold over the internet is very tiny when compared with traditional retail outlets. However the trends have shown that the popularity of internet shopping is increasing and will continue to do so for the foreseeable future. If a firm is willing to use multilingual marketing then they are able to interest people in many countries all around the world without actually having to adjust their marketing strategy. When doing business on an international level you cannot just rely upon English. Hundreds of companies are starting to realize just how important international marketing strategy and multilingual marketing strategy are.

If you adopt a common international marketing strategy for all markets then the business will be able to benefit from increased economies of scale caused by the multilingual marketing. It all depends what the aim of the multilingual marketing strategy is, different approaches would yield different benefits. Advertising campaigns and multilingual marketing can be used alongside each other to make potential customers from both countries feel much more secure.

When searching on the internet most people will use their native language, in fact only 1% of users search in other languages. This goes to show just how important multilingual website marketing campaigns are to modern day businesses. Bear in mind that not all of Europe speaks English, using an English website you can expect to communicate to around 16% of the population, however if you have a German, Spanish, Italian and French website then you can deal with 74.1% of the European market.

It is important to remember that a multilingual website marketing strategy is not just a simple translation of your English website; it should also cater specifically for that unique country. Businesses can use multilingual advertising to supply the necessary information to users all around the world quickly and efficiently. The information should be displayed so that it suits their culture. Basically you have to be willing to adapt your business in order to get them on board.

Another very important reason why businesses should consider using multilingual websites is because websites presented in their own language will make visitors twice as likely to remain on the website and continue reading. People will also be four times as likely to buy from a website in their native language.

Some big names in the world of internet business have suggested that in the not too distant future the internet will have huge multinational online shopping malls which will dominate the international internet marketing scene we’ve already witnessed this through large auction sites such as ebay. If this does happen then you can be sure that many SME multinational companies will be using these malls to leverage the marketing potential of their goods and services. Any International marketing strategy needs some careful consideration, there’s no doubting that multilingual website development and multilingual web marketing is the most cost effective step in international expansion and will remain so for very long time.

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Business Opportunity and Internet

June 17, 2008 at 5:59 pm · Filed under business tips ·Tagged , , ,

The advent of Internet and the ensuing “new economy” has opened up a plethora of new business opportunities - and an “inevitable” number of business casualties. Shapiro and Varian (1999) argue that while technology changes - economic laws do not. Internet firms with non-profitable business models have been forced to shut-down.

According towebmergers.com a total of 135 companies in the US had shut down by December 2000, on the other hand these where out of an estimated 7,000 to 10,000 private or public Internet firms (Businessweek 2000). Although share prices have fallen and the current value of Internet firms can be said to be closer to their true potential, the Internet will still play an important part in world business. It is important to remember that despite overvaluation, Internet companies have made a strong impact and probably will continue to do so into the future. The online retailer Amazon.com has only after 6 years of business grown to have sales of nearly $ 3 billion.

Furthermore both the portal yahoo.com and the auction site ebay.com are reporting profits and growth rates of up to 90% per year. All three companies have expanded internationally and are now among the world’s best-known brands (The Economist 2001b). Given the growing importance of both international trade and the Internet, this paper will discuss the emergence of born global Internet companies. A born global Internet firm is a company that can be said to fulfill three distinct characteristics.

(1) The firm takes advantage of Internet technology to develop new and innovating products and/or services,
(2) the firm conducts a major part of its core business functions online and finally
(3) the firm is international already from inception.

SME’s have taken Internet as the safest route to internationalization.

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Quick Tips to Remember When Developing A Multilingual Marketing Website

June 5, 2008 at 2:43 pm · Filed under business tips ·Tagged , , , , , , , , , , , , , , ,

The economy is strange, the global economy as a whole may be booming however the American economy is pretty sluggish to say the least. Emerging markets such as India and China have started expanding at a huge rate, and this has made globalization a serious consideration for almost every business. It’s certainly the right time to start a new business as you can easily have access to a worldwide market thanks to the internet. The internet has made globalization so much easier, there have been a number of new marketing strategies developed such as multilingual advertising and multilingual marketing. Due to these new innovations it is possible for businesses to dramatically expand their customer base. International internet marketing isn’t always easy, in fact it rarely is.

Multilingual website marketing overview

Multilingual website marketing is actually a pretty simple concept it basically means that you can build websites in a number of different languages which makes them suitable for a much larger audience. Yet, marketing the website in all these languages is where the challenge begins. Having an international marketing strategy is a very important concept in modern business environments, it is extremely important for businesses to consider their international internet marketing activities. Large businesses use about 0.1 percent of their revenue on multilingual advertising strategies. This may not seem like a lot, but it’s actually $1 million for every $1 billion earned by the revenue. For multilingual marketing to be a success it requires substantial investment. You must carefully consider your budget before you decide whether or not multilingual website marketing is suitable for your business.

Establish a C.M.S

Many companies have a decentralized C.M.S or content management system to control their multilingual marketing activities. This makes it easy to make adjustments in the design across all of the websites at once instead of editing each website individually. It is always advisable for businesses to use this central C.M.S in order to reduce costs associated with maintaining multilingual marketing websites. When using multilingual websites it is important that the business is sure that the meaning of the translated text is identical to the original meaning. You should write the content bearing in mind that you will get it translated in the future, don’t make it too difficult. Many businesses use Global templates to organize their multilingual website marketing content so that they can standardize the websites to look the same. Global templates mean that all of your websites can look the same which should enhance your brand image.

Cost considerations

An international market strategy must be conducted at the same time as international internet marketing; both of these are very closely related as the internet allows for a significant amount of research. This makes sure that your budget will cover all of the necessary expenses. You need to consider the expenses of marketing, website development and writing documentation in all of the different languages.

It is a good idea to create a website which acts as a gateway to your individual sites. I’m sure you’ve typed in a company name and had either a page in English or a page with welcome written in lots of languages. By attracting visitors in this way multilingual advertising is more likely to be a success. Don’t make it difficult for them to change the language, but at the same time you don’t really want a separate address. Most people will access your website directly using your domain name, you could even consider using cookies to remember the user’s selection and navigate there by default the next time.

Testing your angle with ongoing marketing.

You shouldn’t just translate the content of your site, it is also important to translate the Meta data contained in your HTML code this will ensure that your multilingual website marketing strategy is a complete success. SEO (Search engine optimization) should also be carried out for each of these sites, make sure that they are all submitted to the popular search engines. If you take a look at Google this is a good example of a multilingual marketing webpage, you can easily select to view it in many different languages.

There’s no doubting that multilingual advertising is quite difficult, however you don’t have to reinvent the wheel. Pick up inspiration from some of the leaders of multilingual marketing such as Google. Multilingual advertising makes people twice as likely to read your website, and also makes them four times as likely to buy products from you.

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How Quickly Do You Need To Get A Globalized Website?

May 29, 2008 at 11:55 am · Filed under business tips ·Tagged , , , , , , , , , , ,

I’ve had quite a few questions lately on how to move towards a globalized website.

And the marketer in me responds my looking at the clients current business and what the client is marketing.

Save Through Knowledge

It is important for any online business with a desire for international expansion to know what is involved in website globalization.

Why?

There are things you can do today, no matter how many international sales you have already made or how many you have in the channel that will save you time and money later when you actually need to move towards website localization and website globalization.

This is the key reason why website globalization is such a buzz word.

But, remember, the internet is mainly a medium to communicate with your clients and prospects. Of course, it does have other major roles in your international business expansion. But it is first and foremost a means to communicate.

Know Your Current Business Needs

You need to clearly identify where your company is in the realm of international business before looking at the other functions of the internet for your international expansion.

If internet is a way to communicate with your clients and prospects, what will you be saying to them? Where is your current internet marketing?

Here are the basic types of international marketing with a short definition:

Domestic Marketing = selling your domestic product to your domestic market

Export Marketing = selling your domestic product to your foreign markets

International Marketing = adapting your product and selling it to one country

Multinational Marketing = selling your foreign product to a small group of countries

Global Marketing = selling one product to the whole world

Most online businesses are basically in the Export Marketing phase.

They may say or think they are in Global Marketing phase but international and multinational marketing are between the two phases.

A Global Marketing company has all of the market knowledge to be able to position their product well throughout the world. They have gone through the other stages of international marketing to have the knowledge, experience and power. These are generally very large companies.

Plan Your Next Step

Once you know where your company is on this simple scale, you will find it easy to see where your company needs to go to. It is generally one step up.

Trying to move more than one step up at one time needs mega investment, and is not easy.

Let’s say you are currently in the Domestic Marketing phase and want to jump straight to the International Marketing phase.

This jump is possible. You will just pass over Export Marketing but will require a lot more investment in market research. It is possible and has been done by countless other organizations..

Take Action Towards Your Next Step

If you were to spend a little time actively doing Export Marketing you will gain foreign market knowledge that may surprise you.

During the time you were active in Export Marketing you could use internet marketing practices to actively incite foreign customer feedback and adapt your product to one foreign country.

Define Your Website Needs

So how does this help you in developing your globalized website? Your website needs to communicate with your market.

Your website is your most powerful means of communication during each of your marketing steps towards a global market. But it is your medium for your current marketing needs.

  • Look at where your current business revenue comes from.
  • Identify what you need to do to move towards more international business.
  • Be realistic in your international expansion goals.
  • Take things one step at a time.
  • Plan for your internationalized websites, your localized websites and your globalized websites in a time frame that corresponds with your business objectives as they progress towards further international development.

Adapt Your Website Globalization To Your Plan

By looking at your current international business and knowing what you need to do next, it is fairly easy to see when you will need an internationalized website, a localized website and a global website.

Internationalize your website as soon as you are marketing your domestic products to foreign markets.

Move towards website localization as soon as you are marketing to specific countries.

Plan for your website globalization by implementing the internationalization and localization processes with good internet marketing practices and you will be ready when your international markets need it.

Internet’s Second Major Role In Your International Business Development

While planning for your website globalization do not forget the second biggest advantage internet brings towards your international business development.

International Market Research

Plan for your internationalization, localization and globalization with your international market research in mind. The more client research you can do online the more successful your business will be. Internet makes your research cheaper, faster and easier to carry out. But you need to plan on testing methods to get feedback.

Internet is much more than a medium to communicate, it also gives you the means to find out all about your international markets. Keep your marketing in mind as you plan for your international websites.
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