Global Trade Practices
2012/1/4
When is a company ready
to go Global?
Global Trade Practices
Chapter 2
Mart Corporation
Martwash.com
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WTP- Chris Schrage
Four essential Conditions
Management Commitment
InIn-Depth experience with product or
service
Adequate Cash Flow
Capacity and capability to produce
international products
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WTP- Chris Schrage
Chris Schrage, College of Business, University of Northern Iowa
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Global Trade Practices
2012/1/4
Management Commitment
Commitment Statement
– Commitment of top management
– Allocation of talent
– Financial resources
Necessary to overcome barriers
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WTP- Chris Schrage
Management Issues
Payback period
Allocation of
resources
Overhead
allocation
Staffing decisions
Decision--making
Decision
Risk aversion level
Willingness to allow
failure
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WTP- Chris Schrage
Product Experience
Must be successful in home
market
Don’t undermine domestic
market for international
ones
6 questions should be
considered before
developing strategy
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WTP- Chris Schrage
Chris Schrage, College of Business, University of Northern Iowa
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Global Trade Practices
2012/1/4
Question 1
Who are endendusers?
Why YOUR
product?
Businesses
–
–
–
–
Manufacturers
Service providers
Governments
NGOs
Personal consumers
– Perishables
– Durables
– Luxury
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WTP- Chris Schrage
Question 2
What is your
company’s
competitive
advantage?
Innovation
Price
Features
Quality
Service
Distribution
Brand equity
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WTP- Chris Schrage
Question 3
What is the
most
effective
distribution
channel for
your
product?
Direct
– Internet
– Personal sales
Indirect
–
–
–
–
–
Retail
Bulk
Agents
Brokers
Wholesale
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WTP- Chris Schrage
Chris Schrage, College of Business, University of Northern Iowa
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Global Trade Practices
2012/1/4
Question 4
What role does a company
play in the value chain?
What valuevalue-added activities do you perform?
Support Activities
Organizational Infrastructure
Information Systems
Human Resources
Research and Development
Materials Management
Manufacturing
Marketing
Primary Activities
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WTP- Chris Schrage
Question 5
What is the
overall
assessment
of the
industry and
the potential
for profit?
Truly assess the
market potential
Access resources
available to provide
objective basis for
decision
Don’t rely on “what
you would like to
do”
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WTP- Chris Schrage
Porter’s Five Forces
Bargaining Power
of Buyers
Rivalry among
existing firms
Bargaining Power
of Suppliers
Firm or
Product
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WTP- Chris Schrage
Chris Schrage, College of Business, University of Northern Iowa
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Global Trade Practices
2012/1/4
Question 6
How will you
evaluate
success or
failure?
How much you
can stretch
your
resources?
Be objective
Beware of escalating
commitment
Don’t go too big all at
once
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WTP- Chris Schrage
Cash Flow
It COSTS money to develop new
international markets
Stopping an initiative due to finances
detracts from credibility
– May be hard to restart
The key is efficient usage of
resources and proper strategy
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WTP- Chris Schrage
Capacity and Capability
Manufacturing
– Impact of sales volume
increases
– Shortened production periods
– Logistical challenges tracking
buyers separately
Product
– Able to modify
– R&D challenges
– Instructions and product
documentation for
appropriate customers
Service
– Necessary staff
– Know and
understand
standards
– Levels of expertise
– Handle increased
volume
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WTP- Chris Schrage
Chris Schrage, College of Business, University of Northern Iowa
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Global Trade Practices
2012/1/4
Perceived Barriers
International Expertise
Product vs. International
Expertise
Language
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WTP- Chris Schrage
Should you visit markets?
If at all possible,
YES
Many resources
and support
systems available
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WTP- Chris Schrage
Chris Schrage, College of Business, University of Northern Iowa
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