In today’s rapidly changing global business environment, many companies are attempting to sell their products across international borders. Unfortunately, not all companies are successful in their attempts to accumulate market share.

“There are definitely dos and don’ts to conducting business in foreign countries,” says Lance Descourouez, a California Vistage Chair and expert in international training and organizational development. “Many companies with terrific products or services fail miserably because they don’t take into account several components critical to success.”

Following are Lance’s recommendations for achieving success in international markets.

Conducting Business in International Markets

• Think globally, act locally. The biggest mistakes happen when either of these two points is missed. Develop big growth strategies, and then tailor them to a local approach.
• Locate and utilize a cultural informant. Be sure to pick the right person — one who lives locally and has significant contacts in the country you’re entering.
• Be innovative and flexible with structure, timing and investment. Focus on how you conduct business, since the way you structure your business in your home country may not work in other cultures.
• Be familiar with local business customs and laws. By understanding how these things pertain to your product, you can minimize future obstacles.
• Recruit skilled nationals. To be more successful and competitive, companies should attempt to find local workers and avoid exporting employees to the country they are newly entering.
• Provide technical training for foreign key executives in your home country. By enabling your foreign senior executives to experience your company headquarters first-hand, you are more likely to have similar results in other locations around the world.
• Remain selective and strategic with all methods of market entry. Research and critically evaluate potential markets prior to taking action.

How to Reach the Right Market

The rules for reaching these markets are different than they are for traditional top-of-the-pyramid markets. Here are a few guidelines:

• Don’t think exports. The base of the pyramid market isn’t the same as what is traditionally thought of as the export market. The export market caters to those in overseas markets who are in the top third of the economic pyramid.
• Big picture thinking is essential. Look at your business model through the lens of the big picture and find the connections between your product line and the vital needs of millions of people in emerging markets. Think in terms of your core competencies, not just your current product line. Re-think products, packaging, distribution channels and production. (For example, Unilever’s new lower-cost detergent has been packaged into single-laundry packets, instead of five to 25 pound boxes that are purchased by the wealthier middle class. They are manufactured in hundreds of regional manufacturing plants, and sold by everyone from small shops to street vendors.)
• Start small. Start with one product in one country. Emerging market economies are complicated enough. If you’re just starting out and your resources are limited, you don’t want to be in more than one new market. Learn everything you can about one emerging market — the lessons can be applied to the next market you decide to enter, and you’ll be on strategic high ground where you can see and pick the market that with most transference and profitability.
• Think large quantities and small margins. The successful product will sell millions of units. At the same time, profit margins need to also be small. Think low profits per unit, but remember you’re selling millions, not hundreds or thousands of your product.
• Set up a “global links initiative” within your company. To be successful in emerging markets, a company needs the top-down commitment of the chief executive and the allocation of significant human resources. A one-to-two-year commitment of a small team is a minimal time-frame to insure success.
• Set up a learning system. Be sure to capture what you learn so your company can apply it in your next product and market. This body of knowledge will prove to be one of your most valuable assets moving into the future.
• Long-term commitment. The company wanting to add the base of the pyramid to its market needs to realize that the next quarter’s profit margins are probably not going to be impacted. When they come, profits will be substantial, but you need to be willing to make a commitment beyond the short-term horizon. Exactly how long your new profit center takes to be at the scale you want depends on your product, its delivery mechanism, the level of commitment, and your local partner.
• Partner creatively. You will need a local partner. This could be a local business, government agency, NGO (non-governmental organization), co-op or other group. In Bangladesh, the Gameen Bank, a very successful micro-lender, is the partner of cell phone manufacturers. Gameen loans women in rural Bangladesh the money to purchase a cell phone that they use to set up a “phone booth” in their village. The women make enough in the first four to eight months to pay off the loan and earn two to three times the national average income after that. The village is now connected to the rest of the world.

Export Strategy 1: Sell through third-party distribution companies

This strategy is the most cost-effective way to enter a foreign market that you know little about.  The distribution company is supposed to know about the marketplace and how to get customers. The strategy works very well when doing business is based solely on existing relationships, such as selling to government agencies and large state-owned corporations. A local company has a clear advantage.

The downside of this strategy is that a distribution company may represent many companies and products at the same time. Their focus on your product is not 100 percent.  Communication between you and your distribution company can also be an issue from time to time and finding a viable distribution company is often a challenge.

Export Strategy 2: Set up your own sales office

Setting up your own operation in a foreign market gives you 100 percent control of sales and marketing, customer support, and more.  It can be costly however. It works well for companies with financial strength and for those that are committed to the markets. Such a strategy also undeniably avoids potential issues when working with a third-party distribution partner.  Companies that are considering this strategy have to establish a management structure for managing overseas offices from the head office.

Export Strategy 3: Set up your own representative office and sell through third party distribution companies

This strategy has worked well in minimizing the downside of working with a third-party company and offers a desirable customer and product support for local customers. The distribution company is involved in selling, while the representative office acts as a support office in such areas as logistics, communication, and collaboration on strategic issues.