Having a Pro-Active International Strategy

By Jim Foley, Director, Turner Center Operations, Illinois SBDC International Trade Center

Companies often have a reactive approach to their export growth, meaning they do not proactively select their foreign markets. In some ways, this is understandable as export opportunities often find their way to potential exporters. For example, a company exhibiting in a U.S. trade show may be approached by a company from Brazil expressing interest in the company's products or services.  Though Brazil may not have been a market under consideration, the U.S. company may still pursue the opportunity. And though eventually the decision may be a positive one, it may not have been the best initial decision. The U.S. company might have been more effective focusing its efforts in a market other than Brazil, or the company may have missed important opportunities in more profitable markets. It also may have lost first-mover advantage in a market with greater long term potential.

Having a reactive approach may be easier and faster, but it may not be the most effective way to develop your export strategy. A proactive strategy involves ranking foreign market opportunities through research and then confirming the top markets by visiting the countries. The steps involved in ranking foreign markets include: selecting the indicators, assigning weights to each indicator, finding data for each indicator, and analyzing the results.  It would generally all be done through a spreadsheet.

The most challenging part of the process is getting the right indicators, which will vary based on the product or service. An exporter of consumer goods might use indicators such as population, per capita income, imports of like products, and imports of complementary products. A producer of industrial goods would be more interested in macro indicators such as GDP or infrastructure growth. In either case, incorporating trade statics can be particularly powerful. Online databases provide insights into which countries purchase the most goods of a particular type and from which countries. The data is very specific and ranges from data on live animals and processed foods, to sunglasses, earthmoving equipment, and potato chips – just to pick a few local favorites.

The Illinois SBDC International Trade Center has access to additional data through propriety databases. We can research per capita use of household goods (cell phones, TVs, and washers), to industrial goods such as consumption of electricity or healthcare. These additional datasets can be a useful way to create a more robust spreadsheet.

Once a final ranking is done, best practice would be to travel to the highest ranked countries to confirm demand and gain a better understanding of the competitive landscape. This may be to a foreign trade show or a trade mission to the region. Our trade center has extensive experience in developing these market ranking models and information on state and federal programs to assist with finding partners. For more information, contact Jim Foley at jff@bradley.edu or call (309) 677-3075.