I started my international trade career when I was in the first grade. Back then we had a shop in one of the old bazaars in Istanbul where we used to sell small household appliances to people from former Eastern Bloc.
These countries were still closed markets, so individual entrepreneurs used to come to Istanbul to buy stuff to sell in their countries. We had a broad range of products from hair dryers to mixers, from toasters to kitchen mixers all piled up to the ceiling.
With a broken grand bazaar style Russian, we were struggling to explain and sell our products. With an innocent childish naiveté, I asked my father
“Why don’t we just sell to local people?”
I thought I found a groundbreaking idea until he replied:
“There are not enough local buyers.”
Well, we had them all around so I couldn’t get what he meant. It got me a few decades and an MBA degree to understand that all businesses need international customers, in other words, they need to internationalize.
The term ‘internationalization’ is ambiguous, and definitions vary depending on the phenomenon they include. Business dictionary defines it as
« the growing tendency of corporations to operate across national boundaries. »
Cambridge dictionary gives a broader definition:
« to make or become something international. »
The pursuit of international buyers
From the historical perspective, the seek for international customers began with humanity’s ability to travel across the seas and borders. Ancient merchants expanded their activities to large regions with the help of trade routes and ships.
Today, luckily we don’t have to ride a camel to introduce our products to international markets. ( I did for 30 mins, and I can assure you it was the most laborious journey ever)
But do we ever need to expand our business internationally?
We came back to my naive question, and now I can say yes, and these are the three main reasons:
Nature teaches us a valuable lesson. You grow or die. Imagine the race for the sunlight in rainforests. All plants compete to rise higher so that they get more sunshine which is very limited on the ground.
Your business is the same, you either get bigger to get more sunlight or be under the shadow of others. Opening up to international markets is the only way to find more clients for most of today’s businesses.
Today, going international is easier than ever. You don’t need to gather a crew and sail several months, but depending on your product, you can ship globally with a click.
Take international warehousing services as an example. You can rent space on several international warehouses around the world and send your goods directly from there like a local supplier.
There are countless new ways to grow your business internationally, take the first step.
You are getting shivers imagining all of a sudden; all your customers decide to stop buying from you. It’s frightening, yet possible if you only have local customers.
For countries where economic stability is a rare occasion, having international customers is your safety belt. A financial crisis or political instability might hinder your revenue stream, and you can find yourself tussling with the accounting departments of your clients.
Even for countries where economic stability is taken for granted, things have changed. Trade barriers, an economic downturn or just the natural product cycle, might result in a sudden decrease in your sales. When you get there, it might be too late to internationalize considering your limited resources.
Imagine you are in your car, singing along with your favorite song on the radio, rolling just on the limit, you take an abrupt turn and what, there is a trunk on the road! Well, at that point it might be too late to think about your safety belt!
Competition is healthy
Let’s just confess now. Deep down we all envy Michael Phelps.
On the cover of the all sports, health, and fitness magazines (not to mention Time and Forbes) with his torso only comparable to the flesh and blood version of David, the masterpiece sculpture of Michelangelo, he is like a Greek god of success.
Imagine, would he be sweeping all Olympic medals if he decided to stay as the best swimmer of Baltimore?
I’m skeptical about that.
Competition makes us better at whatever we do. Challenging your international rivals, whether they are industry giants or crawling start-ups, will help you excel in your product or service by learning different approaches and ways of working.
In addition to that, internationalization will force you to encounter new people resulting in new connections.
Confront your rival, and even if you fail, you will learn how to fight.
To sum up, as the world becomes a global village, internationalization is the key to success of any new business seeking growth. Today, start-up companies plan their internationalization at the conception stage.
More and more venture capitalists are asking for internationalization plans. On the other side, multinationals are in the pursuit of international buyouts to reinforce their international presences.
What about your organization, where does your company stand?
Well, do you still wonder what happened to our home appliances business?
The flare fizzled out rapidly, and we had to shut down the shop.
Because we relied too much on Russian customers, we thought they would always come to our shop to buy hair dryers, and we didn’t grow our business.
It took only a couple of years for them to open up their domestic markets to international investors and they eventually got more prosperous, so they preferred to enjoy the Mediterranean resorts rather than coming to the bazaar to bargain for hair dryers.
That comes to international market diversification, and that’s another article topic!