Does your company have an International Business Strategy? Many companies do not have one, and those that do often let its relevance lapse or file it away for none to see. An effective international business strategy can translate to exponential company growth. But many companies leave untapped potential revenue, or worse yet, expose themselves to unnecessary business risks. This is a crash course on international business strategy that will hopefully lead to the next level of planning.
 
Why Enter International Markets?
 
Most large companies expand into international markets because their home market has been saturated. International expansion allows large companies to take advantage of economies of scale and a known brand. That is less often true for small-to-medium sized companies, who are more likely to be exploiting the market potential of a niche or group of niches. Smaller companies may choose to enter international markets to leverage external competitive advantages through partnerships.
 
A few years ago, an American biotech company partnered with a Singaporean partner. The American company had an innovative technology but no experience in scaling a product for commercialization. The company in Singapore had not only commercialization experience but also the production facilities to mass produce the product.
 
Another overlooked reason to enter an international market is arbitrage or learning from a different competitive environment. One of the most famous examples of this learning comes from Pampers Diapers. Many years ago disposable diapers were large, bulky products. Procter and Gamble entered the Japanese market but struggled to gain much foothold—until the company reengineered their diapers to work better in the small storage spaces in most Japanese homes. These thinner, more absorbent material used in Japan then made its way into all of P&G's global markets including its home market in the U.S.
 
There are two reasons that should actually dissuade your company from going international. First, it will likely be a disaster to assume that international markets will yield short-term revenue and profit gains. International markets are normally slow to establish and should always be seen as a long-term investment. The second common mistake is to follow a competitor into an international market. Competitors may have a reason for internationalizing that does not necessarily translate to other companies. Depending on the competitor's quality of market research, they may be completely incorrect in their assumptions behind their internationalization decision. Always do your own research to validate market potential and market risks based on your company’s own assets and opportunities.
 
Matching International Strategy with the Rest of the Company
 
For some companies, international markets are core to the company's identity and branding as a world leader in their industry. For other companies, international markets are a mere afterthought that helps to offload excess inventory. Since no one country has more than 20% of world market share, it would seem that the former set of companies may be closer to maximizing their financial potential.
 
International strategy should be a reflection of the company's overall strategy, recognizing the company's strengths, weaknesses, opportunities and threats. For instance, if the company has a brand built on high-quality products, it makes no sense to sell a low-quality version in other markets and create a confusing international brand identity. International operations should be incorporated into the company's existing corporate structure. If the company is organized and segmented by product, function or geography, then international should be incorporated into the existing structure. Too many companies mistakenly create a separate international department. This can limit communications and learning between those assigned to positions focused on international and domestic operations. ( Vivian )14 Mar,2012

Other News:
What You Really Need to Know About International Business Strategy
What’s the best way to find potential New Zealand business contacts?
The International Entrepreneur – 5 Ways to Lose an Important International Client
Turkey: A Youthful Nation at Europe´s Doorstep—Part 2
Turkey: A Youthful Nation at Europe´s Doorstep—Part 3
How to Sabotage Your Negotiations
Now May Be the Perfect Time for Your Small Business to Go Global
The Cultural Difference Part 4 - Confrontation in Multicultural Teams