Copyright © 2011Pearson Education, Inc. Publishing as Prentice Hall
Global Aspects of
Entrepreneurship
CHAPTER 15
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 2 Ch. 15: The Global Aspects of Entrepreneurship
Why “Go Global?”
Offset sales declines in the domestic market
Increase sales and profits
Extend products’ life cycles
Lower manufacturing costs
Lower product cost
Improve competitive position
Raise quality levels
Become more customer-oriented
In addition to the text
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch. 15: The Global Aspects of Entrepreneurship
Nine Strategies for Going Global
Creating a Web Site
Relying on Trade Intermediaries
Creating Joint Ventures
Foreign Licensing
International Franchising
Countertrading & Bartering
Exporting
Establishing International
Locations
Importing &
Outsourcing
15 - 3
FIGURE 15.1
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 4 Ch. 15: The Global Aspects of Entrepreneurship
Strategies For “Going Global”
Create a presence on the Web
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch. 15: The Global Aspects of Entrepreneurship
Asia
41.2%
15 - 5
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 6 Ch. 15: The Global Aspects of Entrepreneurship
The Web’s Global Reach
Available 24 hours a day to anyone anywhere in the world.
1.60 billion Web users worldwide
220 million in U.S.
Nearly 1.4 billion in other countries
Customers who live outside the U.S. account for more than 50% of all online sales by U.S. companies
54% of eBay transactions take place outside the U.S.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 7 Ch. 15: The Global Aspects of Entrepreneurship
Create a presence on the Web
Rely on trade intermediaries
Strategies For “Going Global” (continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 8 Ch. 15: The Global Aspects of Entrepreneurship
Trade Intermediaries
Domestic agencies that serve as
distributors in foreign countries for
companies of all sizes.
Types of intermediaries:
Export Management Companies (EMCs)
Export Trading Companies (ETCs)
Manufacturer’s Export Agents (MEAs)
Export merchants
Resident buying offices
Foreign distributors
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 9 Ch. 15: The Global Aspects of Entrepreneurship
Strategies For “Going Global”
Create a presence on the Web
Rely on trade intermediaries
Form joint ventures
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 10 Ch. 15: The Global Aspects of Entrepreneurship
Joint Ventures
Domestic joint venture – two or more
domestic companies form an alliance for
the purpose of exporting their goods and
services in a foreign market.
Foreign joint venture – a domestic firm
forms an alliance with a company in the
target nation.
Most important ingredient:
Choosing the right partner.
Use the joint venture as a
learning process.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 11 Ch. 15: The Global Aspects of Entrepreneurship
Strategies For “Going Global”
Create a presence on the Web
Rely on trade intermediaries
Form joint ventures
Engage in foreign licensing
Consider international franchising
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 12 Ch. 15: The Global Aspects of Entrepreneurship
International Franchising
To expand internationally, franchisers
should:
1. Identify the country or countries that are best
suited to the franchiser’s business concept.
2. Generate leads for potential franchisees.
3. Select quality candidates.
4. Structure the franchise deal.
Direct franchising
Area development
Master franchising
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
15 - 13 Ch. 6: Franchising and the Entrepreneur
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 14 Ch. 15: The Global Aspects of Entrepreneurship
Strategies For “Going Global”
Create a presence on the Web
Rely on trade intermediaries
Form joint ventures
Engage in foreign licensing
Consider international franchising
Use countertrading and bartering
Export
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 15 Ch. 15: The Global Aspects of Entrepreneurship
Exporting
Small business accounts for 90.7% of all
companies involved in exporting, but they
generate just 21% of the dollar
value of the nation’s exports.
Significant impact: Small companies
generate $1.1 billion each day in export
sales!
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 16 Ch. 15: The Global Aspects of Entrepreneurship
1. Recognize that even the tiniest companies
and least experienced entrepreneurs have
the potential to export.
2. Analyze your product or service.
3. Analyze your commitment to developing
export markets.
4. Research potential markets and pick your
target.
Steps to Successful Exporting
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Ch. 15: The Global Aspects of Entrepreneurship
FIGURE 15.4 Small Business Exports: Number of Countries to Which Small Companies Export
15 - 17
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Steps to Successful Exporting
5. Develop a distribution strategy.
6. Find your customer.
U.S. Department of Commerce
International Trade Administration
7. Find financing for export sales.
8. Ship your goods.
9. Collect your money.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
FIGURE 15.5 How a Letter of Credit Works
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 20 Ch. 15: The Global Aspects of Entrepreneurship
Strategies For “Going Global”
Establish a presence on the Web
Rely on trade intermediaries
Form joint ventures
Engage in foreign licensing
Consider international franchising
Use countertrading and bartering
Export
Establish international locations
Use importing and outsourcing
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 21 Ch. 15: The Global Aspects of Entrepreneurship
Steps to Successful
Importing or Outsourcing
Make sure that importing or outsourcing
is right for your business.
Establish a target cost for your product.
Do your research before you leave
home.
Be sensitive to cultural differences.
Do your groundwork.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 22 Ch. 15: The Global Aspects of Entrepreneurship
Steps to Successful
Importing or Outsourcing
Protect your company’s intellectual
property.
Select a manufacturer.
Provide an exact model of the product
you want manufactured.
Stay in constant contact with
the manufacturer and try to
build a long-term relationship.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 23 Ch. 15: The Global Aspects of Entrepreneurship
Barriers To International Trade
Domestic Barriers
Government imposed barriers.
Attitude: “My company is too small
to export.”
Lack of information about
how to get started.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 24 Ch. 15: The Global Aspects of Entrepreneurship
International Barriers
Tariff – A tax a government imposes on
goods and services imported into that
country.
Nontariff barriers – Governments that
protect domestic industries
Quotas - Limits on the amount of a
product imported into a country.
Barriers To International Trade
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 25 Ch. 15: The Global Aspects of Entrepreneurship
Barriers To International Trade
International Barriers
Embargo - Total ban on imports of
certain products.
Dumping - Selling large quantities of a
product in a foreign country below cost
to gain market share.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 26 Ch. 15: The Global Aspects of Entrepreneurship
Barriers To International Trade
International Barriers
Political barriers - Rules, regulations and
political risks.
Business barriers – Different cost
structures and business practices.
Cultural barriers - Differing languages,
philosophies, traditions,
and accepted practices.
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 27 Ch. 15: The Global Aspects of Entrepreneurship
International Trade
Agreements
Major Agreements:
World Trade Organization (WTO)
North American Free Trade
Agreement (NAFTA)
Dominican Republic - Central
America Free Trade Agreement
(CAFTA-DR)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 28 Ch. 15: The Global Aspects of Entrepreneurship
Global effectiveness requires
entrepreneurs to:
Learn about the global market
Seek the assistance of professionals
Recruit and train employees to think globally
Consider using partners and joint ventures
Determine which opportunities best fit your company
Conclusion
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 15 - 29 Ch. 15: The Global Aspects of Entrepreneurship
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