Manufacturers should seek foreign sales.
If the idea of becoming an exporter scares you, you are not alone. Stories of deals gone bad, piracy and logistical nightmares abound. On the other hand as stated in a recent report by the accounting firm RSM McGladrey, “Going global is not without risk, but competing in the United States against increasingly global competition is no picnic either”. Coupled with the effects of the declining dollar, this vast, new market is just too large to ignore.
If your company has some of the following strategic advantages, you may be a good candidate for international business: Does your product have some technological advantage or complexity, or do you have specialized or unique capabilities and technical skills? Do you have a quality advantage or focus on very high-end products? Do you have a service advantage by offering superior technical support or response time? Do you have foreign manufacturing capability that would eliminate many of the cost disadvantages of the U.S. manufacture?
If you are in these enviable positions, you are in a prefect place to capitalize on international business.
Not long ago, the National Institute of Standards and Technology Manufacturing Extension Partnership (NISTMEP) conducted a study on what differentiates successful exporters from those who have tried exporting only to fail or be less successful. The study found that the most effective success models for exporting included: proactive leadership in both commitment and mindset, and best practices learned and adopted over time.
CEOs of successful exporters are committed to international business. They are willing to dedicate staff, in particular an international sales manager or a vice president. CEOs tend to be more patient with profitability in foreign markets than their less successful counterparts, often willing to wait many years. They have established international plans and set international sales targets and metrics for their organizations. And, finally they place more value on regularly visiting foreign partners and customers.
Successful exporters also develop best practices in four key areas: Partners, Relationships, Planning, and Payment.
Partners generally include multiple channels: distributors, representative and agents as well as selling direct. Successful exporters see partner selection as critical and they proceed very systematically. However, they rarely rely solely on partners for market intelligence or lead generation. They tend to do their own in-country homework as well.
They see personal relationships as more important in foreign business than they are in the U.S.
Planning efforts are more rigorous in the less-forgiving, more competitive international market.
They purposely vary payment methods across different markets to minimize credit and reduce risk.
If you have what it takes to go global and would like to pursue it further, please call us at 973-998-9801 or contact me at firstname.lastname@example.org.
About the Author
Robert J. Loderstedt is president & CEO of the New Jersey Manufacturing Extension Program (NJMEP).