Guide to Going Global:

The best way to make your business ready to go global and start trading internationally.

Ask An Expert

Discussion with renowned global trade expert Murdo Beaton and Abdul Mann, creator of the cloud-based export solution EdgeCTP.

Geoff:

OK gentlemen, taking a company international is a daunting process, so how can I tell if my business is ready to go global?

Murdo:

The statement: “Taking a company international is a daunting process”. This to me sounds rhetorical and may not necessarily be true. I think that over the years, we have developed, here in the UK at least, a mindset that trading internationally is a daunting process. Now, it need not necessarily be a daunting process. Yes, there are certain issues that have to be taken into account, but these are all issues that can be very comfortably navigated, and there is a lot of help available to companies who wish to consider going global.  It is a challenge, there’s no doubt about that, but not one that companies should actually back away from, especially if they’re of a mind to actually expand their activities into the global arena.

Geoff:

So putting the question another way then: when do businesses actually know that they are ready to go global?

Murdo:

I don’t think a company will ever know, in definitive terms, that it is ready to go global. I think much depends on the commitment that a company has in terms of its own strategic objectives. If the domestic market would appear to have been reasonably exploited in terms of the market share that a business can expect, then it is going to be necessary for that business leader to actively consider where further expansion can be achieved. If not through the introduction of new products or new technologies, then it must surely be with the expansion of their market place into other global areas. That is, a business determines that it has achieved the maximum margins possible in its own domestic market, and as a natural next step is to explore global markets. However, before launching headlong into a global mission. the company leadership should answer the following questions:

  • Strategic Vision: Does the company have the commitment, within the framework of its business management + workforce, to go global?
  • Skills and Resources: Does the company have trained human resources necessary to trade internationally in the most efficient manner?
  • Return on Investment: Going global is going to cost in terms of time + money to perform market research; trade missions (in market visits); increased cost of delivery; additional paperwork administration etc.  Is the investment in these additional costs and learning feasible against the expected sales growth return i.e. is it worth going global?

When such questions are asked, then it is quite obvious that the business leader will have to execute an initial feasibility exercise to determine exactly whether the company, as it currently is, is compatible with the likely demands of the overseas market. In general terms, a business watching the behaviour of its competitors, watching the behaviour indeed of its suppliers, may well determine that it ought to be considering following them into global markets.

Abdul:

I guess the other thing you’re saying Murdo is, it’s a mindset. So the mindset of management to turn around and say, do we want to go global? Are we ready ourselves, emotionally and psychologically ready, to take our product to an international place. We discussed earlier how easy it is to be able to do that thanks to the leverage they can obtain through the internet and the easier communications, making the world a smaller place. So, I think the psychological hurdle is probably one of the first ones for people to get over.

Murdo:

Yes, there is a big danger for businesses, and that is when the business leader has a personal ego that wants to drive the business into areas where the business is not yet ready to go. Now, there are many instances of that where the leader of the business for one reason or another thinks that going global, as it were, is absolute. “This is what I want to do. I want to be up alongside my peers, to be able to say that I am exporting.” This is not a game we’re playing. We are actually in the business to make money and we have to be careful about what we do in order to safeguard any monies that we are likely to make. The business leader has to approach this without this mindset of “I’ve got to get into the export market because other people that I know, leading businesses have gone into the export market.”

The main thing for the business leader is to make sure the business is:

  • Financially healthy
  • Resourced correctly
  • Trained/schooled in the protocol of international trade
  • Leading with a product/service that has potential in the overseas market(s)

There is no point in saying “Am I ready to go international?” unless I already have some indication that what I’m ready to go international with, is something that is likely to create a demand for my business in the overseas market. If I’m making a widget that has no attraction in the overseas market then why am I going to waste my time and spend valuable resource going into an overseas market?

Abdul:

I guess what you’re saying is also then, apart from the psychological mindset of the management and people in the company, the next thing under human resources, is to also look at what systems they have in place. If they don’t have a sales process that scales, or systems that allow them to scale internationally and the only thing they can do is the domestic market, then they really need to look at how their system enables them to be able to efficiently grow into an international sales process. Eventually, you’ll be selling something to overseas markets, and you need to be able to do that and understand that process, and know whether your processes will support international trade. That’s key as well before you also embark upon the market research of it. Would it be better that you prove your product in the domestic market? A lot of people say “If you can’t make it at home, there’s bound to be a customer for it overseas, so let me just go overseas to start with.”

Murdo:

Yes, we always suggest to companies, maybe you should first of all try and secure business in the domestic market and exhaust the potential that the domestic market might offer you. It may, however, be that for the product or service that the company is actually providing, that the domestic market is too competitive. This can happen! The option in actual fact is to go into the overseas market, where the potential is greater and the competition might be less, for whatever reason. So this is all part of business management. This is up to the business leader to determine, you know, “Is there a market for my product in my home market and if so what level of potential should I be suggesting I should achieve? If I achieve that level of potential, then I know I have done it with a business model that is sustainable in all its elements.”

Abdul:

But that business model has then got to flex as well because it’s got to take the dynamics and the cultural differences, it’s also got to take the foreign exchange elements into it, letters of credit and so on.

Murdo: 

Indeed, but it has already proved that with its success in the domestic market it has the core components with which to do that. So, if new systems and new processes are likely to be required, then the business leader will have confidence in knowing that his business is capable of implementing these requirements.

Geoff: 

I hope you enjoyed this. If you’d like more information on international trade, go to www.edgectp.com