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Going Global

  Jul 6, 2012

Every entrepreneur has a dream of one day being international. For the Top100 medium-sized companies in Kenya, such a topic was very exciting when Prof. Mike Rosenberg a Senior lecturer at IESE Business School in Spain took to the stage to take the entrepreneurs through some of the key factors an entrepreneur should note intending to go global. At a breakfast held at Strathmore Business School on 5th June 2012 for the Top100 medium-sized companies in Kenya, Prof. Rosenberg glued the audience to his presentation.

To growing companies, the act of reaching across borders – whether one is outsourcing or looking to expand into new markets can be intimidating. In many instances the thought of the world being flat and/or bumpy comes to mind to many entrepreneurs when it comes to going global, each entrepreneur who has been on this expedition has a different answer to this. Besides, there are several tips that are important for all entrepreneurs intending to go global to take note of. Prof. Rosenberg summarized these factors as follows:

1. Country Risk

Global business focuses on the risks and rewards of expanding into new geographic and cultural markets. Value assets and operational profits are key elements to any business person intending to go global, hence specific factors that can affect these elements at a country level need to be seriously looked into. Such factors may include but not limited to currency control, devaluation, regulatory changes and the stability factors of a country which might be influenced by civil wars, political risks and mass riots.

2. Unexpected events

There are certain unexpected events that can spell disaster for a business expanding, specifically if medium – sized companies are involved. These events may include earthquakes, floods, Tsunamis, fire, among other natural disasters. With the dangers of global warming, entrepreneurs are forced to trade on safer ground when it comes to investing in most prone countries. For example Japan has in the recent past experienced various earthquakes attacks, some parts of the United States are more prone to hurricanes, these disasters end up causing closure of businesses due to losses incurred. In any business, provision should be given to unexpected events more so if the businesses is to be set – up in a new country. An example he gave was of the Arctic Circle – in all its hard ice – thanks (or no thanks) to global warming, the ice is beginning to gradually melt away, giving way to opportunities of mineral mining and shipping routes to countries that surround it.

3. Long-Term Trends

Long-term trends in relation to going international are very hard to measure but one can easily predict them in a period of two to ten years depending on what trends are being set in the world. Some of the vital drifts that are vivid in today’s society include; the aging and migration factors, many developed countries have a large workforce of immigrants due to the aging nature of their citizen. Therefore this can influence the workforce a new business person will end up working with and/or rely on. Energy is another key factor that is driving businesses in the world today; availability of crude oil, nuclear energy among other forms of energy can easily determine the direction of businesses in a country, investors would prefer where they can easily get cheap energy. New technologies cannot be underestimated; this has become one of the major drifts in the social and business world. Entrepreneurs have no choice rather than to keep up with the developments; for example facebook, twitter, and other social media sites have given a new twist to business. The development of the new technological gadgets in the market too gives a certain status to the business world. Connecting with the whole world via, Skype, video conference, have all made business easy across the globe, accordingly any entrepreneur hoping to go global should embrace technology fully and keep up with the changing styles.

Other long term trends include war, political leadership of a country and diseases.

5. Emerging economies v/s Disruptive innovation

More local entrepreneurs, from the emerging economies such as China, India, Brazil are playing a critical role in the global competition by becoming challengers of global business. Emerging economies in the last decade has been viewed as an opportunity for businesses to grow and at the same time it is considered as a threat to existing businesses and generation at large. For instance in countries where the development of emerging economies is coupled with the fact that the majority of their population are poor and cannot afford products designed to developed markets poses risks of exploitation of the those at the bottom of the pyramid, thus instead of developing people further the innovation becomes disruptive.

Thus, for entrepreneur intending to go global they need to reconsider if the markets they intend to venture in will bring more benefits rather than troublesome economies. A successful business should be holistic where all spheres of the society benefit without posing dangers to other areas.

Africa: The New Business World

In his statement, Prof. Rosenberg noted that Africa has a lot of potential in business. He challenged the small and medium-sized companies to take up the initiative to tap the emerging markets within Africa and advance globally. He also emphasized on the need of targeting the middle class market considering this is a segment where business can grow; He also reinforced the need to improve institutions for better result.

He finalized his presentation by giving the merits of businesses going global sighting that going international gives one an opportunity to grow and learn. His parting shots were an encouragement to all entrepreneurs to strive to have long term strategies, this can be achieved by trying to understand the history of where they intend to do business, they must understand their business and they should be able to see or predict the future for better results, whether locally or globally.

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