February 18, 2010
by Mark Drake
For years the Canadian federal and provincial governments, not to mention all those armchair experts, have been urging manufacturers to move their export focus beyond the North American market. Small and medium-sized businesses, with some notable exceptions, have largely ignored their advice, but they may not be able to do so much longer.
The well-served Canadian market promises limited growth, and US market expansion is threatened by increasing protectionism, extraordinary trade and budget deficits, and unsustainable debt. Worldwide market options are daunting, and “going global” involves preparing a detailed international business plan, to include, among other things, a choice of target markets, preliminary market research, proposed market entry strategies, an assessment of cultural challenges and an analysis of expected costs and profitability. The Forum for International Trade Training (visit FITT at www.fitt.ca) provides a good export readiness assessment. Here are some of the main points to consider.
Management commitment. Will exporting fit with your objectives? Does management fully support exporting and is there an appropriate budget? Does the board have the vision, passion and enthusiasm to champion an export drive? Are there senior executives on the staff who have international business experience? If the answer is no, the plan must take account of the time and cost to recruit and train the necessary people.
Operational commitment. Will the same emphasis be given to international operations as is given to domestic ones, such as processing orders efficiently and providing speedy contact with representatives and customers? Do current support staffers know about international documentation, brokers and customs agents, letters of credit, transportation, insurance and the legal ramifications of international trade such as the protection of intellectual property? Is there sufficient production capacity for a long-term export commitment? Is the company ready to modify products and packaging to meet international requirements?
Financial commitment. Is the company financially stable? Will management accept a reasonably long term payback? Does the company have experience in managing international currency fluctuations? International business is significantly more expensive than domestic (and even North American) business. Apart from the obvious travel and subsistence costs, there will probably be extensive language-related costs (technical literature, promotional material, packaging and labelling), plus market research and subsequent launch and on-going promotional costs in a new market. Are the financial resources in place, including allowance for contingencies and if not, can they be obtained reasonably easily and economically?