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Introduction

Entrepreneurs find it difficult to both manage and expand the venture

they created.

To expand a venture, entrepreneurs need to:

 Identify opportunities for domestic and international expansion.
 Develop different management skills.
 Infuse new entrepreneurial spirit (intrapreneurship).

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 Introduction


 Factors contributing to international expansion:
 Opening up of controlled economies to market-oriented enterprise.
 Self-interest of organizations as well as the impact of external
events and forces.
 Developing countries need training and education as well as
infrastructure to support their development and growth in the next
century.

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Opportunity Recognition and the
Opportunity Assessment Plan
 The key to successful domestic and
international entrepreneurship is to develop
an idea that has a market with a need for
the product or service idea conceived.
 Opportunity assessment is often best
accomplished by developing an opportunity
assessment plan.
 An opportunity assessment plan is nota
business plan.

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Opportunity Recognition and the
Opportunity Assessment Plan


 An opportunity assessment plan has four sections:
 The first section develops the idea, analyzes competitive products
and companies, and identifies the unique selling propositions.
 The second section focuses on the market—its size, trends,
characteristics, and growth rate.
 The third section focuses on the entrepreneur’s and management
team’s skills and experience.
 The final section develops a time line indicating the steps to
successfully launch the venture.

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Sources of Information
General Information
 SCORE is a nonprofit organization that provides
free online and in-person assistance.
 Small Business Development Centers provides
counseling, training, and technical assistance on all
aspects of managing a new venture.
 The U.S. Chamber Small Business Center
provides start-up assistance through Web-based
tools and resources.
 Other valuable Web sites include:
 nasbic.org, nvca.org, nbia.org, www.fasttrac.org, activecapital.org,
c-e-o.org, entre-ed.org, kauffman.org.
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Sources of Information

 Industry and Market Information:

 Plunkett -Industry data, market research, trends, statistics on
markets, and forecasts.
 Frost and Sullivan -Industry specific information.
 Euromonitor –Information on consumer market sizes, marketing
parameters, companies, and brands.
 Gartner -Information on technology markets.
 Gale Directory Library -Industry statistics and information on
nonprofit organizations and associations.

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Sources of Information
 Competitive Company and Product Information
 Business Source Complete -Provides company and industry
information by scanning the Datamonitor reports.
 Hoovers -Provides information on both large and small companies
with links to competitors in the same NAICS (North American
Industrial Classification System) category.
 Mergent -Provides detailed company and product information on
U.S. and international companies

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Sources of Information
 Government Sources
 Census reports
 factfinder.census.gov
 www.census.gov/ipc/www/idb
 Export/import authority
 UN Comtrade
 www.business.gov/expand/import-export
 NAICS and Standard Industrial Classification codes
 www.naics.com/info.htm
 www.osha.gov/pls/imis/sic_manual.html

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Sources of Information
 Search Engines
 There are many key terms for searching the needed industry,
market, and competitive information.
 Trade Associations
 Good source for country-specific industry data.
 Trade Publications
 Provide information and insights on trend, companies, and trade
shows from a local
 perspective of the particular market and market conditions.

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The Nature of International Entrepreneurship

International entrepreneurship is the process of an

entrepreneur conducting business activities across
national boundaries.
The activities necessary for ascertaining and
satisfying the needs and wants of target consumers
take place in more than one country.
With a commercial history of only 300 years, the
United States is a relative newcomer to the
international business arena.

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The Importance of International Business to the Firm

International business has become increasingly important to firms of all

sizes.

A successful entrepreneur must be able to:

 Fully understand the difference between domestic and international
business.
 Respond accordingly thereby successfully “going global.”

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International versus Domestic Entrepreneurship

Economics
 In a domestic business strategy, the entire country is organized under
a single economic system and has the same currency.
 Creating a business strategy for a multicountry area means dealing
with differences:
 Levels of economic development
 Currency devaluation
 Banking, venture capital, marketing, and distribution systems.

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 International versus Domestic Entrepreneurship

Stage of Economic Development

 Certain factors significantly impact a firm’s ability to successfully
engage in international business such as:
 Certain factors significantly impact a firm’s ability to successfully
engage in international business such as:
 Fundamental infrastructures.
 Educational systems.
 Legal system.
 Business ethics and norms.

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 International versus Domestic Entrepreneurship

 Balance of Payments Current Account

 With the present system of flexible exchange rates, a country’s
current account (the difference between the value of a country’s
imports and exports over time) affects the valuation of its currency.
 The valuation of one country’s currency affects business transactions
between countries.

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 International versus Domestic Entrepreneurship

 Type of System
 Difficulties in doing business in economies that are developing, or in
transition.
 Use of barter or third-party arrangements in these countries to
increase business activity.
 Barter -A method of payment using nonmoney items.
 Third-party arrangements -Paying for goods indirectly through
another source.

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International versus Domestic Entrepreneurship

Political-Legal Environment
 Political risk analysis -An assessment of a
country’s political policies and its stability prior
to entry.
 Types of political risks:
 Operating risk.
 Transfer risk.
 Ownership risk .
 Conflict and changes in the solvency of the
country.

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International versus Domestic Entrepreneurship

A country’s legal system regulates:

Its business practices.
The manner in which business transactions are
executed.
The rights and obligations involved in any
business transaction between parties.
Critical areas for every entrepreneur:
Property rights.
Contract law.
Product safety.
Product liability.
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International versus Domestic Entrepreneurship

Language
One of the biggest problems for the
entrepreneur is finding a translator.
Significant problems can occur with careless
translation.
Care should be taken to hire a translator whose
native tongue is the target language and whose
expertise matches that of the original authors.

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Technological Environment

 The variation and availability of technology

are often surprising, particularly to an entrepreneur from a
developed country.
 New pr oduct s i n a count r y ar e cr eat ed bas ed
on the conditions and infrastructure operant in that
country.

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Figure 5.1 -Various Aspects of
Culture

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Available Distribution Systems

Factors to be considered in determining the

distribution system for a country:
Overall sales potential.
Amount and type of competition.
Cost of the product.
Geographical size and density.
Investment policies.
Exchange rates and controls.
Level of political risk.
Overall marketing plan.

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Motivations to Go Global

Profits.
Competitive pressures.
Unique product(s) or service(s).
Excess production capacity.
Declining home country sales.
Unique market opportunity.
Economies of scale.
Technological advantage.
Tax benefits.
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Strategic Effects of Going Global

Physical and psychological closeness to the international

market affects the way business occurs.
Cultural variables, language, and legal factors can make a
foreign market that is geographically close seem
psychologically distant.

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Strategic Effects of Going Global

Issues involved in psychological distance:

The distance envisioned by the entrepreneur may be based
more on perception than reality.
Closer psychological proximity makes it easier for an
entrepreneurial firm to enter a market.
There are more similarities than differences between
individual entrepreneurs regardless of the country.

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Foreign Market Selection
One good market selection model employs a five-
step approach:
Develop appropriate indicators.
Collect data and convert into comparable indicators.
Establish an appropriate weight for each indicator.
Analyze the data.
Select the appropriate market from the market
rankings.

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Entrepreneurial Entry
Strategies
Exporting
 Indirect exporting.
 Direct exporting.
Nonequity Arrangements
 Licensing.
 Turn-key projects.
 Management contracts.

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Entrepreneurial Entry Strategies(cont.)

Direct Foreign Investment

Minority Interests.
Joint Ventures.
Majority Interest.
Mergers:
Horizontal merger.
Vertical merger.
Product extension merger.
Market extension merger.
Diversified activity merger.. 3-28
Entrepreneurial Partnering
 Foreign entrepreneurs know the country
and culture.
 They can facilitate business transactions
and update the entrepreneur on business,
economic, and political conditions.
 Good partners share the entrepreneur’s
vision, are unlikely to exploit the
partnership, and can help the entrepreneur
achieve his or her goals.

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Barriers to International Trade

General Agreement on Tariffs and Trade (GATT)

Established in 1947 under U.S. leadership; includes
over 100 nations.
Objective -To liberalize trade by eliminating or
reducing tariffs, subsidies, and import quotas.

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Barriers to International Trade

Increasing Protectionist Attitudes

Support of GATT resulted in:
Strain on the world trading system and the
economic success of countries perceived as not
playing by rules.
Establishment of bilateral voluntary export
restraints to circumvent GATT.
Trade Blocs and Free Trade Areas
Free Trade Area (FTA).
North American Free Trade Agreement (NAFTA).
Treaty of Asunción –Mercosur trade zone.
European Community (EC).
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Barriers to International Trade

Entrepreneur’s Strategy and Trade Barriers

Trade barriers increase entrepreneurs’ costs of
exporting products or semifinished products to a
country.
Voluntary export restraints may limit
entrepreneurs’ ability to sell products in a country
from production facilities outside the country.
 Entrepreneurs may have to locate assembly or
production facilities in a country to conform to local
content regulations.

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