Think Global-E

Posted: July 8, 2012 by Chuck Matthews in Global, Marketing, Planning

“The interconnected, interactive, global economy challenges
both the way we see business and way we do business.”

Kenichi Ohmae, Global Strategy

With the World Choir Games in full voice right here in Cincinnati and the Queen City reaching out to the world on multiple fronts throughout the year, this is the summer to be thinking globally. In June of 2010, I had the privilege of hosting the 55th Anniversary World Conference of the International Council for Small Business (ICSB) here in Cincinnati, with over 430 delegates representing educators, researchers, business owners, and thought leaders from over 60 countries. This past week, I had the honor to spend some time with an eight member delegation from eight sub-Saharan African countries participating in President Obamba’s Young African Leaders Initiative. On an even larger scale, it is estimated that over 350 Choirs representing 46 countries will bring over 15,000 visitors arriving from 64 countries to the U.S. and our hometown. If you are a Tri-State small business owner or entrepreneur, this is the perfect time to consider the possibilities of Global Entrepreneurship (Global-E). Ask yourself, what unserved and/or underserved global market opportunities exist for current and future goods and services delivered by your venture?

Global-E by the numbers

Locally, in 2011, I conducted a survey among 100 leading Tri-State manufacturers and asked what percentage of sales were local, regional, national and international.  On average, 14% of sales came from international markets, with 21.8% local sales; 21% regional sales; and 43.2% national sales. While North America is still a commanding consumer market, with 95% of the world’s population and 65% of the world’s purchasing power outside the U.S., the potential for international trade is very viable.

This syncs up with data from the Department of Commerce which suggests that exports are an integral part of the U.S. economy: directly supporting nearly 10 million jobs and noting that one in three manufacturing jobs and almost one in five agricultural jobs are tied to exporting. DoC data show that exports grew by nearly 17 percent in 2010, after dropping 14.6 percent in 2009. Overall, of U.S. firms that export, 98% have less than 500 employees and account for 35% of merchandise export sales, up from 31% several years ago.  The fastest growing segment is among micro-enterprises or firms with less than 20 employees.  Moreover, while the majority (63%) exports to only one country, nearly 32% export to 2-9 countries and over 5% to 10 or more countries.

Shifting trends: Go Global vs Born Global

Historically, firms progressed along the lines of proving themselves in domestic markets before looking abroad.  Kenichi Ohmae, in coining the term “globalization,” outlined five successive stages: 1) export oriented; 2) establish overseas branches; 3) relocate production base; 4) achieve “insiderization” (becoming an “insider” in a given country); and 5) complete globalization.  For example, Motorola moved through this process over time, achieving not just a country specific product or product line, but a truly global product sought in multiple countries simultaneously.

By contrast, entrepreneurs today often have an immediate global vision. That is, they are globally integrated virtually from the beginning of their enterprise or “born global.”  This evolving global business paradigm allows nascent entrepreneurs to move from ideation, conceptualization, formulation, and implementation to a world marketplace more quickly. For example, it is easy to overlook that the “www” in the Internet url stands for “WORLD Wide Web,” as in operations may be local, but markets need not be.

Two key questions

The students in my graduate Global Entrepreneurship class represent this shifting trend.  On average, a little over one-third will be U.S. citizens, with nearly two-thirds coming from countries around the world, such as India, China, France, Taiwan, and South Korea. This new generation of entrepreneurs is changing the global landscape, transforming the adage, “think global, act local” into a global entrepreneurial competitive advantage.  Jim Foley, author of The Global Entrepreneur: Taking Your Business International, succinctly frames the two questions that guide this process: 1) Should you directly or indirectly enter international markets? and 2) what product or service adaptation will be needed to be successful in a given market place and how much modification are you willing to do?

It’s all about relationships

Edgar L. Smith, Jr., award winning entrepreneur and founder and CEO of World Pac Paper, LLC shared his considerable experience and expertise with my Global Entrepreneurship students this past week.  One of the key takeaways he imparted was the need to identify, cultivate, and maintain strong business and personal relationships locally and globally.  It fit perfectly with the focus on people, product, and process that defines doing business globally.  Born global entrepreneurs seek to gain a global competitive advantage across borders, build global supply chains, establish business, financial, and customer relationships accessible in markets worldwide.

As you enjoy the World Choir Games, ask yourself, “Is your small business ready to go global?”  and explore the possibilities. Till next time, all the best for continued entrepreneurial success!  For more information on this and other columns from The Entrepreneurs, please visit www.cincyentre.com.

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