US exports continue to grow, but many US companies lack the international business savvy to capitalize on this potential source of increased sales and profits. The proliferation of trade deals and a weakening US dollar have resulted in one of the most favorable export markets in decades. Foreign importers of US products report increasing demand for US products, from popcorn to pet food. The US has enjoyed 11 consecutive quarters of export growth; However, with 95% of the world’s population residing outside US borders and an increasingly rosy international sales outlook, experts wonder why only 5% of US companies are currently exporting. But how do we initiate and sustain growth in unfamiliar markets?

1. DEFINE STRATEGIC NEEDS

Tapping into new markets provides the opportunity to increase revenue and profit. However, this initiative must be consistent with the general strategy of the company. Inconsistent, sporadic, or unfocused deployment of resources directed toward international growth can result in an underperforming initiative absorbing limited resources with little return. Barriers to entry (tariff, regulatory, and trademark restrictions) need to be identified and addressed. A SWOT analysis detailing the company’s strengths, weaknesses, opportunities and threats will identify and help maximize the company’s strengths, minimize its weaknesses and focus on the international opportunity.

An international growth plan consistent with the corporate strategy will increase the chances of success. It is necessary to address the tactical aspects of international development, such as sales, distribution and marketing. International growth factors can be different enough from US models that a lack of familiarity can drastically reduce the chances of success. Above all, there must be clear direction, full management support and dedicated resources.

2. ENSURE APPROPRIATE ASSISTANCE

Small and medium-sized businesses starting or expanding into international business will find the US Government’s Department of Commerce (DOC) an enthusiastic partner in helping American businesses succeed globally. This organization coordinates resources from 19 federal agencies to help US companies plan their international strategies in an increasingly globalized environment. In an unfamiliar foreign market with confusing regulations, uncertainty and risk, DOC can help US companies navigate the foreign sales process and avoid pitfalls such as payment defaults and misappropriation of trademarks and intellectual property.

DOC’s business service provides a surprisingly hands-on range of quality services including in-country market research, trade events and missions, business opportunities, and introductions to potential business partners. The Export-Import Bank and Small Business Administration unit to help finance exports of US goods and services to the international marketplace, enabling businesses to convert international leads into strong sales.

Firms that specialize in international business development can help fuel expansion abroad. These firms are groups of highly trained and experienced professionals who offer practical and cost-effective assistance to companies committed to maximizing revenue and profit potential through accelerated international growth. The range of services offered varies by company, but in general they help companies conceptualize, implement and manage large or small international business development projects. These services can range from determining the foreign market potential for a product to managing a company’s export sales to identifying and qualifying foreign strategic alliances.

A company wishing to penetrate the international market must allocate a fully dedicated resource to this initiative. This individual must be the axis that connects the resources, knowledge and culture of the organization with the international initiative. As the business develops, additional resources must be allocated to maximize the opportunity. These should be considered investments rather than costs.

3. DETERMINE THE MARKET ENTRY STRATEGY

The appropriate market entry strategy for a company will largely depend on its level of international development. For a company just beginning its international development, market penetration through in-country dealer sales may be the fastest and most cost-effective way to enter a foreign market. Selling through in-country distributors is relatively low risk and will provide valuable learning opportunities. Once the target country or region has been identified, a process that will follow naturally from the SWOT analysis, the selection process can begin. Various US government agencies and trade associations can provide a wealth of data to begin narrowing down the selection.

Trade publications and events are also an excellent source. Factors to consider when selecting a market may include criteria such as the regulatory environment, market size and potential, cost of entry, and competitive environment. To further narrow the chances, an in-country visit is required. Once there, the use of business leads, competitive assessments, local government assistance, and interviews with potential candidates will provide additional information and insights. The main considerations when selecting a distributor are: willingness to assign a dedicated resource, market leadership or track record, marketing knowledge, complementary and non-competitive products or services, site inspection and financial stability.

Penetration into a new international market is often perceived as an extension of the existing national business. Consequently, many US companies ignore standard business guidelines that require rigorous market analysis. Only after conducting extensive due diligence can a product or service offering and accompanying marketing programs be crafted.

A company’s preferred mode of entry (domestic distribution, joint venture, merger or acquisition) will depend on that company’s primary objectives, from opportunistic sales to positioning for long-term market-driven growth.

Economic globalization will increasingly lead to the creation of strategic alliances. American companies must ensure that potential partners share short-term and long-term goals to reduce divergence of ideas and efforts. Common values ​​and shared ethical/business standards will improve communications, transparency and effectiveness. Partners must have complementary strengths and weaknesses to build a stronger and more effective alliance. The principles and processes for conflict resolution and the relationship must be drafted and agreed upon by all parties involved for the partnership to run smoothly.

4. EFFECTIVE MARKETING DESIGN

All markets have points in common. However, effective international marketing begins with the awareness that markets are also different in ways that are not immediately apparent. The key is to understand consumers and identify their needs through culturally specific market research. Focus groups can be especially effective in identifying the wants and needs of the international consumer. The advertising agency used to develop the offer must be local or have local representation. Employees with a deep understanding of the characteristics and idiosyncrasies of the market will be particularly effective in communicating the desired message and creating and enhancing the brand image. Language skills and an affinity for different cultures are critical assets when trading internationally.

Flawless execution is key. As a company executes international strategy guided by a solid business plan, it’s important to celebrate milestones and benchmark yourself against industry leaders.

Although not complete, these four steps will help guide you to successful entry and growth in the international marketplace.