US firms failing to capitalize on global business opportunities

By: | at 07:00 PM | International Trade  

US exports are poised for growth, but many American companies lack the international business know-how to capitalize on this source of increased sales and profits. According to Ena Garay, a partner with Miami-based International Business Development Partners (IBDP), a consulting firm specialized in helping companies reach their international business objectives, rapidly increasing globalization and the need to stay competitive will prompt more US firms to contract specialized business experts to grow a sustainable international presence.

Proliferating trade agreements, increasing international demand and a weakened US dollar have resulted in one of the most favorable export markets in decades. In NAFTA markets alone, US firms exported $169.5 billion to Canada and $97.5 billion to Mexico in 2003. The figures are up 36.5% and 12.9%, respectively, from 1997. Total US exports to Central America increased 6.8% from 2002 to 2003, and 32.4% since 1997(*)—even ahead of the pending completion of a free trade agreement with Washington.

The US government offers services designed to help American companies succeed in international markets, including reimbursement of overseas marketing expenses, and foreign importers report increasing demand for US products—from popcorn to pet food.

Yet, with 95% of the world’s population residing outside of US borders, and an increasingly promising international sales outlook, experts are questioning why only five percent of US companies are currently exporting.

“There are many reasons,” says Garay. “First, small and medium-sized US companies that could easily export often find language, culture and foreign government bureaucracies daunting. A company will often shelve foreign business opportunities for lack of resources and expertise in favor of the more familiar and established domestic business.”

Consequently, notes Garay, the international business does not grow and never receives the necessary resources without which it cannot expand. The situation becomes a self-perpetuating cycle that never allows the company’s true foreign business potential to fully emerge. Garay contends there is a need for international business expertise at all stages of a company’s expansion into new markets.

Larger firms are not immune. “Multinationals have been hit by layoffs in past years with fewer employees in sales and marketing departments doing more work,” continues Garay. “This also limits resources dedicated to developing international business as domestic sales, traditionally a larger percentage of the business, continue to demand the lion’s share of available resources.”

For many firms, the answer to capitalizing on international opportunities lies in contracting expertise on a temporary basis. Companies providing this expertise, such as IBDP, often specialize in services including identifying strategic alliances and in-country representation, serving as sales and marketing offices for U.S. companies’ exports, or preparing and implementing specific country entry strategies. These are services that may not justify a full-time employee but, without them, a company cannot successfully grow its international business.


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