Exporting and international business can be interesting, exciting and in some cases challenging. In all cases it should be profitable and help a business grow.
Doing business internationally is not the same as doing business at home. There are new skills to learn and new knowledge to acquire about the country you will be going into. You will need to learn about the different laws and regulations, the different customer buying habits, and change your marketing strategies and materials to appeal to the new country you are entering. It is important to remember that the way you operate your business will be determined by culture of the market you are entering, not yours.
It is important to understand the differences between domestic and international business but they should not inhibit your interest or drive for success internationally. Rather they should whet your appetite for success.
No two cultures are the same and understanding both the social and business culture in another country is the first key to success. Culture defines everything a society does, from its business practices, to its response to advertising and marketing, to negotiating sales. It is important to include research on the culture of the country(s) that you intend to sell to prior to entering their market. Understanding these, often sensitive, areas will mean that you are better prepared when first entering the market. Although the people that you will deal with will not expect you to be completely in tune with the culture, respect and politeness will go a long way.
Level of Competition
The level of competition you will experience in foreign markets is likely to be more dynamic and complex than you experience in domestic markets.
A good strategic tool to use to determine if you are able to compete in a particular international market is the Porters 5 Forces analysis. This tool will assess your supplier power, buyer power, threat of competitor products and the threat of new entrants to the market.
The key points to determine when gathering market intelligence on the market you intend to enter are:
- Understanding how the market works
- Who your direct competition is, and
- The best market entry strategy.
It may be difficult to find reliable information and data for some markets, particularly less-developed economies as their statistical agencies may not be as sophisticated as developed market economies. However it is important to gather as much information as you can to successful enter the market.
Link to Level 2: Market Research
No two countries have the same political and legal systems. Each government has its own policies relating to foreign firms and products. The key is to understand that once you are in a foreign market you must abide by the rules and laws of that country, not the ones in your own market. These laws and regulations can severely impact the potential long term success of your business and it is wise to consult with legal counsel, based in that country, to ensure you reduce the risk of these laws and regulations effect on your firm.
Countries determine their laws based on the needs of their citizens not the concerns of foreign companies. By and large, international law is a gentlemen's agreement which is honoured, but not always. For example in areas such as intellectual property, although there are many agreements in place, protecting intellectual property can be time consuming and costly.
Link to Level 3: Intellectual Property
Link to Level 4: INCOTERMS
The degree of technology can vary substantially in foreign markets. If your product or service requires a high degree of technology sophistication to use or implement, then markets with low levels of technology will not be suitable for your busines.
Like technology, business infrastructure in foreign markets will be at different levels of development. This may well have an impact on your ability to get your products to that market. It is important to research your new target market and understand how goods are moved within the country before you commit to that market.
Advertising your product and service will of course be an important component of your marketing strategy. It is important to be aware of the types of media available and the kind of media your target market uses to gain information about products and services they wish to buy. Not everyone is connected to the internet nor is every customer able to read and write. This does not mean those markets should be ignored. It does mean that how you advertise and market your products will require an examination of the most appropriate media for your target market.
There are a many differences between domestic and international business. Whether they are cultural, technical or legal they require an understanding and an appreciation of the differences. Following are a few web links to help you get started.
Canadian Sources for Research, Planning and Country Information
International Organizations and Resources for Statistics and Market Information
Understanding Cultures Information
Next: Reviewing Your Capabilities
Domestic and Global Project Management
- Length: 1503 words (4.3 double-spaced pages)
- Rating: Excellent
There are many similarities and differences between domestic and global project management. A project manager must realize that what might work in their country may not work in a foreign environment. Project managers might find themselves using practices that have worked for them in the past, without even thinking of the new environment, and issues may arise. Project managers need to understand the differences in a different country's environment to avoid and reduce any obstacles that there may be. Some considerations global project managers must consider are the legal, political, security, geographical, economic infrastructure, and culture implications of working with different countries (Gray, 2006).
Some legal and political issues project managers should consider are staying within the laws and regulations of the country they are looking to work in. The foreign environment usually has protection of local workers, and may strongly influence how the different types of projects can be implemented. In addition, security is a high risk factor and must be considered when going to a foreign country.
The geography of a country is also a consideration that one should make. It is necessary in this case to assess what the weather is like such as; does it rain often or is it extremely hot. These considerations must be made and planned into the overall projects, as some of these challenges could cause the project to be delayed if you are working on a construction project. In addition, one must consider the economic infrastructure. It is important to find out how the foreign country conducts business, and how it could influence the project's success or failure. The infrastructure is important, as the project manager would need to know if services required for the projects are available, such as communication. It is important to assess if the project manager needs to be fluent in the foreign language. In addition, it may be necessary to know if there will be resources available to assist in the communication process. (Gray, 2006)
Most developed nations use the same project management techniques including; CPM, risk analysis, trade-off analysis (Gray, 2006). Customs, values and philosophies of the foreign country must be respected by the group working in their area. Many projects have gone awry when the project team members have not recognized or respected the values of the foreign country involved in the project.
Project managers working in a global environment must recognize the various ethnic and sociopolitical challenges involved.
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Project managers must be aware of other nationalities' social customs, religious beliefs and work practices (Gray, 2006). Being open and flexible to differences in team member's backgrounds is important to being effective when managing global teams. In some countries, bartering and even bribery is an expected part of the business process. The labor supply, skill level and education of other nationalities is not necessarily on par with our standards, some have higher standards, and some have lower standards (Gray, 2006).
Even the idea of time as a resource in the United States is foreign to other nationalities. The Hispanic culture puts relationship and people before deadlines and timelines (Gray, 2006). In Japan, team members are used to being pushed and directed as a team, while Americans will go it alone, and want to work more independently. Various holidays among the cultures can influence a project manager's time line and ability to achieve milestones if the team member's ethnic customs are not factored in (Alexander, 2000).
Three distinct challenges are inherent in managing projects with team members of various cultural backgrounds. They include 1) the level of individual responsibility and accountability 2) the ability to accept suggestions referred to as "suggestion acceptance" and 3) a unwillingness to admit problems only unless absolutely necessary (McKinnon, 2003). These three things are "normal" for American project managers, but research has shown that other cultures do not see things the way we do. American's have a "parochial" view, they believe everyone sees things their way, when in fact these three differences alone can have a detrimental effect on projects if team members are unwilling to admit issues or problems, are unable to take other's suggestions and or do not assume the responsibility of their position (Gray, 2006).
Global project managers must first learn and then respect the customs, values, philosophies, religious, language differences and social standards of their host country or their ethically diverse team members. If they do not do this, their projects will not be successful.
Outsourcing has increased over the past few years, creating virtual teams. There have been several forms of project management systems used by this type of team such as Web-based project management systems. Software continues to develop at a rapid pace, and the need for improved communications with virtual teams is a necessity. Currently, incompatible networks, expensive videoconferencing, broadband services not available everywhere, and the inability (due to cost) for virtual teams to meet face to face make virtual team communications much more difficult (Alexander, 2000).
Time delays in other parts of the world are also a challenge for a project manager working with a virtual team. When communication is compromised, trust between virtual team members is at risk. Virtual team members do not have the advantage of assessing other team member's body language or facial expressions. They can only infer meaning through word choice and tone, and this makes virtual communication much more challenging as well (Alexander, 2000). Face to face interactions have been proven to be more than twice as productive as videoconferencing so virtual team meetings have a definite disadvantage (McKinnon, 2003).
When assessing project management trends, one cannot overlook the differences between a competitive versus a cooperative alliance between competing organizations. A competitive alliance means that two organizations are competing for business from the consumer without any type of partnership from the other organization. On the other hand, a trend that is apparent in today's society is, project partnering. This is a method of transforming contractual relationships into a cohesive, cooperative project team with a single set of goals and established procedures for resolving disputes in a timely manner. (Cowan, Gray, & Larson, 1992) This process allows organizations to work together towards one common goal. Partnering makes good business sense for several reasons such as, reduced administrative costs, more efficient utilization of resources, improved communication, improved innovation and improved performance. Overall, as these groups work together over a period of time, they become more comfortable with each other's expectations and communication styles. In addition, they are able to pull all of their expert ice together to improve the quality of their finished product.
In the future, project management will most likely change in comparison to what it is like today. Advances in communication through computer technology, integrated voice data and imaging techniques, and the Internet will provide greater abilities to communicate. The growing ability to exchange information on a global basis will help foster a different world of project management. The ability to use technology for gathering, analyzing, and interpreting data should provide more opportunity for the improvement of the processes and techniques involved in managing projects (Cleland, 2002).
With the technology advancements and increase in outsourcing, the Web-based project management system continues to increase. In the future, virtual teams will depend on Web-based systems for communication. Increasing advancements in information technology, such as wireless communication, will provide new avenues for managing projects in the future (Gray, 2005). Another area gaining attention is the establishment of databases, useful in data mining. Organizations are establishing Web-based databases for recording estimates and actual task times and costs on past projects. These data points can be used for improving estimates on future projects.
The virtual project team's electronic communication today is limited to e-mail, teleconferencing, faxes, and in some cases videoconferencing (Gray, 2005). As telecommunication systems become more reliable and efficient worldwide and videoconferencing with high-definition resolution becomes readily available, future project teams will be able to hold meetings in which geographically separated members visually interact with each other and e-mail will be augmented by video messages. In the future telephone conversations will be replaced by direct video interaction using PCs.
In the next decade, there are several trends that will be important to project management and its success. First, many organizations are outsourcing basic job functions while reserving the more complex tasks for the internal employees. This helps them focus on the more difficult tasks at hand, to improve quality. Next, it is obvious that tans cultural projects are becoming more common as the global market expands. A project manager should be able to manage people from different cultures, create teamwork, and overcome cultural differences. Lastly, flexibility and adaptation to change is critical and with this, the organizational Culture has to change to support this trend. Overall, organizations need to allow freedom in the workplace to help become accustomed to a rapidly shifting environment.