The World is Now Your Oyster

"Falstaff: I will not lend thee a penny.
Pistol: Why, then, the world's mine oyster, which I with sword will open."

William Shakespeare
"The Merry Wives of Windsor," Act II, Scene II

In Shakespeare‘s day, global commerce consisted of sending ships to subjugate other continents and bring their treasures home. Today, the global marketplace is calling once again, but this time the goal is not to plunder but to partner with growing economies around the world to create opportunities for mutual gain. Today, the watch word is definitely globalization. Going forward, companies will find it hard to grow business if they aren‘t operating on a global platform. This is occurring for a couple of important reasons.

First of all, the stagnant economy has dampened growth in historically strong markets like North America, Europe and Japan. At the same time, economies in places largely out of the line of fire – the BRIC markets of Brazil, Russia, India, and China come to mind – have come through the Great Recession largely unscathed, and those businesses with the vision, commitment and resources to expand into these areas, and others like them, will reap the benefits of this new oyster. The most recent forecasts by the International Monetary Fund (IMF) predict economic growth in the US to be a paltry 2.4% for the remainder of 2011. By contrast, the IMF pegs growth for Brazil at 4.5%, Russia at 4.8%, China at a whopping 9.65 and India at a very robust 8.2%. Clearly, global markets are where the action will be going forward.

However, new technology is also driving the rush to globalization. Social networking, mobile communication, and cloud-based technologies make it easier to manage sales teams, identify and build relationships with local partners, manage inventory, and negotiate the complex rules and regulations of doing business in remote parts of the world. The advances in technology are especially significant for small and medium businesses (SMBs). Not all that long ago, these businesses would have been intimidated by the logistics of doing business globally because their resources might have seemed insufficient. Now, with powerful new communication tools at their finger tips, SMBs can be just as successful as big enterprise firms, and maybe even more successful, because SMBs have the capacity to be more creative and nimble in adjusting to unexpected shifts in market opportunities.

The urgency for SMBs to focus on globalization was highlighted in a recent story about the newest Deloitte survey of mid-market US companies. The report mentioned that, currently, 80% of US mid-market companies do all of their business domestically. However, the report went on to state that within three years, 65% of US mid-market companies will be doing at least some business outside of the US. That is a big shift in a short span of time.

With that said, here are three questions you must address if your business is to take advantage of the important opportunities that globalization has to offer:

How do I identify opportunities in emerging markets? – One thing is certain, the ambition level in current emerging markets is equal to that which drove the industrial boom in the US at the beginning of the 20th Century. The opportunities are there, and to a large extent, they can be uncovered using the same territory and account planning process that you should be using to grow your business now in the mature markets you serve. Creating an institutional map to help identify voids in the areas you can best serve is a good first step. As a rule of thumb, any initiatives that are connected to supporting the rapidly expanding middle class in these countries will pay big dividends in short order, if you do a good job of addressing the other questions we are about to address.

How important are relations with the host country? – As Google‘s must publicized clash with the government of China demonstrates, the ability to profitably do business globally has as much to do with having a firm grasp on the politics, regulations, and culture of the country as anything you accomplish in territory planning. The rule of thumb here is do your homework, move slowly, and build strategic relationships with people inside the country who can help you navigate the sometimes mystifying and frustrating hoops you may be required to jump through. Above all, before you partner with anyone inside the country, get to know them very well and seal the relationships with the strongest legal agreements possible in order to avoid misunderstandings later.

What are the keys to risk management in emerging economies? – Some of the risks of doing business in emerging markets are the same as managing risks anywhere. The opportunity must be sound, the partner relationship must be strong, the supply chain must be efficient and secure, the labor pool must be skilled and reliable, and the lines of communication must be open and crystal clear at all times. However, complications related to distance and culture present formidable challenges that you must solve for before jumping into any major global project. Add to the above the fact that you must also account for any political instability or policy that might impact your opportunity. It can‘t be emphasized strongly enough that you must be connected to sources that can help you ask the right questions and meet the right people before jumping into a major project. Many experts suggest beginning with a small project with minimal risk in order to learn the ropes and build the right relationships.

Without a doubt, globalization presents risks that must be managed and questions that must be answered. However, there is also no doubt that the opportunities for doing new business and building new markets is exploding worldwide. Someone is going to take advantage of these opportunities, and it might as well be you.

Action items:

• Do you know where your global opportunities are?
   
• Do you know who your global competitors are? Do you know who they are going to be?
   
• Do you have a globalization strategy in place?
   
• Describe the three best opportunities you see for expanding your business global, and explain the risks and questions that must be addressed in order to move forward.

Walter Rogers is the President and CEO of Baker Communications. Baker Communications is a sales training and development company specializing in helping client companies increase their sales and management effectiveness. He can be reached at 713-627-7700.

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