Are you ready to go global?
Discussion About The Benefits To Going Global
As we discussed in a previous Article there are many benefits for entrepreneurs participating in global business activities. We group them in three categories: strategic, financial, and production related. Are you ready to go global? Should you wait?
Should You Go Global Today or Wait?
Patricia McDougall, a leading professor of global entrepreneurship at the Kelley School of Business, Indiana University researched this particular issue faced by entrepreneurs around the world. In one of her reports called “International Entrepreneurs: Risk Takers or Risk Managers?” she studied 214 companies in the United States that had a public offering. She found that 41 percent were global by the time of their IPO and most were earning between 10 and 40 percent of sales from foreign markets. Some reported more than 90 percent of sales from global markets.
The conclusion was that she “found no profitability penalty for young ventures wishing to enter international markets, and much to be gained in growth.” The report presents Cisco Systems as an example. Founded in 1985, Cisco began to sell in volume in 1987, and by 1988 16 percent of their sales were from overseas markets. By the sixth year of operations, Cisco’s sales were nearly $70 million, with almost 30 percent of sales coming from “low-risk markets like Canada and France.” They expanded globally by opening up sales offices in each country.
More and more entrepreneurs are going global from day one. An eighteen-country study conducted by the Organisation for Economic Cooperation and Development (OECD) reported that at least 30,00 to 40,000 small firms are estimated to be global at their inception. The number appears to be increasing, as the OECD predicts that by 2007 a third of all small and medium-size enterprises will derive a major portion of their revenues from foreign markets.
There is even more pressure for going global in the high-tech world, as William Davidow discusses in Marketing High Technology. “Be international or fail,” he writes. “Lost market share will haunt you, you will need to compete to stay in step with your competitors, and the technology curve will eventually wash ashore somewhere overseas.”