We covered Lenovo's Worldsourcing blog during an Olympic-led marketing blitz and now the Lenovo Group Ltd., who used to be a little-known computer maker that sold only in China (they acquired IBM's PC business and that's what catapulted them onto a world stage), seems to be getting a little more traction these days with their global push but not without strife.
Cultural clashes (which we wrote about in general on how important it is to be positive towards cultures outside of your own) and power struggles seemed to really trip up their progress.
Read more about Lenovo's story here. Had a tough time finding the original WSJ article online.
We've been saying this all along ... Wiggly Wigglers, a rural England-based natural gardening company, was awarded (U.S. $50,000!) by Dell and its global partners for its innovation and leadership in social media. Using tools like Facebook, podcasting and blogging, Wiggly Wigglers:
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What a wonderful example of how to use social media to grow your business globally. Congratulations to Wiggly Wigglers and all the other award recipients!
Envision your success in 5 to 10 years and make sure whatever you are doing now that it's sustainable. CEO of Ingersoll Rand, Herb Henkel, shares some good tips on driving his firm through global territory.
In case you are not a subscriber to our world famous Borderbuster e-newsletter (www.globetrade.com/borderbuster.htm), we want to share point No. 7 of today's edition because a reader recently commented that she would like to see more ideas on strategy for taking a business global on this blog.
We will continue to meet or exceed your needs here. Thank you for your readership and for your great contributions! Keep them coming!
7. A READER ASKS: Q&A
*Subscriber Exclusive*
Q: To Ask The Expert,
I am the V.P. of International Sales for an office supply manufacturer. Our products are not unique. Therefore, I have found it extremely difficult to export our products although I have done so in the past but on the basis of quoting a very low price with hardly any profit. I then attempt to make up for the per unit profit shortfall with volume orders.
I have always felt that if we price our products at “marginal costs” rather than at full cost, we would have a much better chance at continuing to increase our exports. Are you aware of studies on this issue? How can I intelligently address this point with the CEO of the company? I have approached him on this subject but I do feel if I had information to support my theory, I would have a better chance at changing his mind.
A: From Laurel,
Thank you for your question.
When you refer to “marginal costs,” I am assuming you mean “profit margin.” Also, it looks as if you believe that offering plastic alternatives overseas at a slightly lower price than your domestic selling price (full price) is the key to greater export success. For the record, exporters typically take a 10% to 15% markup over their manufacturing cost.
One of the first measures companies practice in order to remain competitive in the global marketplace is severe price-cutting tactics and oftentimes at the risk of operating at a loss. If you offer a price-reduction strategy merely as a knee-jerk reaction to a rough economic climate, over the long haul, it won’t work. You must develop an export action-plan that supports a process. You are already successful on your export initiatives. Now it is just a case of doing more of the same but with greater discipline and flair.
To build up your exports, start selling in new countries or territories; develop healthier relationships with your distributors and agents; create a more innovative and effective international sales and marketing strategy in general; request your staff takes on more responsibilities; sell more on open account with export credit insurance and work more closely with your credit manager.
The next step is to cut expenses. Here are eight ways to go about it:
1. Shift your production to a lower-labor-cost nation.
2. Cut production costs. Eliminate unnecessary employees and hire temps or contract out when you need to fill in.
3. Build your sales force according to the needs and demands of your overseas customers. For example, if your customers demand extra service, make sure they get it.
4. Reduce the U.S. content of your product to remain competitive overseas.
5. Use the best possible payment method. The one that works best is the one that gets the deal done.
6. Engineer financing from a variety of sources, including U.S. Export-Import Bank (www.exim.gov).
7. Work more closely with your transportation expert (consider going direct).
8. Use the Internet to increase efficiency.
If you put all of the above into play, you will be able to offer more favorable export pricing to your customers, increase your international sales and make your boss happy.
Good luck and let us know what happens.
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World ... please join me in welcoming and congratulating our 44th President of the United States: Barack Obama.
Our friend and colleague Dan Harris, who writes an informative blog (definitely check out) about law in China at the China Law Blog, posted about our recent radio podcast at the Small Business Trends Radio (hosted by Anita Campbell and Executive Producer Steve Rucinski), 10 Ways to Take Your Business Global.
A special thanks to all the folks at the Small Business Trends Radio and to Dan for his kind sentiments about our podcast on his blog.
Direct link to show post.
Direct link to audio file.
Amway is a health and beauty leader, operating in 78 countries and territories around the world and generating U.S. $6.8 billion in annual sales. What does this have to do with global small business? The company was started by two friends in Ada, Michigan.
It goes to show you that hard work can grow a business global. Read more -- and watch the compelling video -- on the fresh new push into GLOBAL for Amway here. And more about the ad campaign here ... even if it is a little late.