Kenya is a leading economy in the Sub-Saharan African region. There exist mechanisms and structures that support bilateral and multi-lateral trade making the international business scene a lucrative and profitable venture. But even beyond the borders, there exist other untapped markets. As an entrepreneur how can you tell that your business is now ready for the global scene? Are there some metrics that an entrepreneur/business owner can use to tell that their business is now ripe to scale globally? International business presents a wider market through which a business can build its customer base and consequently grow its revenues.
Essential metrics that a business owner should track and consider in the decision-making process are revenue, gross profit margin, cash flow, and customer lifetime value.
Some of the considerations you should make include macroeconomic factors such as:
Government policies and regulations. Some countries have open markets while some have closed markets. Government policies rates, and human resources among other components that a business must comply with.
The legal-political climate-when looking to expand into foreign markets, it is advisable for a company to review legal requirements and seek experienced counsel so as to ensure the business is in compliance with the regulations.
Economic climate-this may include factors such as the market trends, market forecasts, feasibility studies and
Technological advancements or lack thereof in the prospective market.
Culture-it is imperative to pre-determine the culture of a market before putting up shop in those markets. The product/service should align with the beliefs and desires of the local audience. This is a huge determinant of whether a business will be successful or not.
Organizations and businesses scale to the international scene due to various reasons;
Expansion of sales
As a strategic initiative businesses expand into foreign markets incase the customer base dwindles in the current geography. This enables the business to recoup what would have otherwise been losses. Expansion of markets will also allow your organization to minimize the risks that accrue to a centrally located business. Diversifying business markets means that a business is cushioned from external risks such as political, economic and societal.
Availability of resources
Developing countries especially often have a lot of untapped resources and a highly skilled labour force. All these are enabling factors for a competitive and lucrative business environment.
There are a number of ways firms can engage in international business;
Under franchising a parent company grants another company(franchisee)the right to use its brand and products. This way the franchiser gets access to different parts of the world. In return, the franchisee then pays loyalty to the franchiser.
Some firms delve into international markets by way of outsourcing labour. For instance, as an entrepreneur, you can source cheaper labour from foreign markets.
Imports and exports
Imports and exports are goods that flow in and out of the country respectively for the consumption of residents of that country. Imports and exports avail a wide array of products and services that are scarce in particular markets.
This is an agreement where two companies enter into a mutually beneficial relationship. In this case, an international company enters into an agreement with a local company to establish a local presence in the host country.
This is a form of international business whereby a company has full ownership of a standardized product. Licensing occurs in the form of copyright agreements, trademarks, and patents e.g. books, movies, and music.
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Done by:Joy Waweru