In his article “Five Lessons From the BP Oil Spill” Andrew Winston shares 5 things all business leaders should take into account when they meet a crisis. 

The article is focused on how BP is handling the oil spill in the Gulf of Mexico.   Obviously, since we are almost 2 months into the spill with no promise of it ending soon, the article is very critical of BP.  And it should be critical of BP – both the company’s reputation and the Gulf Coast are being destroyed.

One of the most important lessons Winston presents is to prepare for the worst.  Every company will run into a crisis at some point of their operations.  Winston tells businesses that “Preparing for a world were things only go right is extremely dangerous.”  There is usually no telling when, or what the event will be, but businesses need to be prepared.  In BP’s case, they need technologies to avoid spills, contain them, and clean them up.

We suggest brainstorming the worst possible thing that can happen to your business, and then thinking about how you would fix it.  This can be anything from an incorrectly manufactured product being shipped out to customers.  The crisis could be losing all of your company’s data when a hard drive or server crashes and you forgot to back it up.  Or it could be something like the Tylenol poisoning case in the 1980s – a situation where consumers could have potentially died from using the product.

How will you communicate with your customers and employees?  How would you get your business back on track?

In his 2005 book The World Is Flat, Thomas Friedman claimed that we are living in a flat world.  Because of the spread of the Internet, and technology that became accessible to small and large businesses across the globe, the borders that previously hindered international business have come down, allowing us to more easily communicate with people across the globe.  Of course, this has massive implications for businesses.  The world is moving faster than many of us can keep up.

At the same time, the flat world has created many opportunities that would not have previously arisen.  Businesses can now operate beyond the borders that have previously restrained them from competing on a global scale.

What are the ways that your business can break down the borders that previously held your company back?

1. Compete Beyond Geographical Borders
Journeys that once took days or weeks can now take only a hours.  Efficient international travel has opened new markets and new opportunities.  Additionally, there are many commercial and governmental resources to help companies of  all size with the logistics of entering new markets.

2. Compete Beyond the Borders of Language
The Ethnologue website quotes 6909 living languages being used in the world right now.  However, even if a business is competing globally, 100 languages are usually the maximum amount that businesses need to use.  However, many international businesses do use English.  And if you need to use another language, Internet translation tools help (but you should not completely depend on Internet translation tools, as they are imperfect).  Additionally you may be able to take advantage of local resources like college students or foreign nationals.

3. Compete Beyond Technological Borders
The Internet is allowing companies to reach out to businesses across the globe.  New technologies are helping companies to cut costs across all operations.

4. Compete Beyond Monetary Restraints
Because of new technology that is accessible to all companies, the cost of doing business is lower than ever.

One thing to remember is that the global economy has fundamentally changed.  Businesses will continue to use technology to reduce costs and increase revenue.  The companies that treat this as a fad or something that will go away in a few years may not be around in a few years.   The companies that can see the trends in the market and adapt to those trends will become globally competitive.

A competitive advantage is the factor that differentiates a business from its competitors.  In other words, it is what separates your business from every other business in your industry.  Think of your business and ask yourself, from a customer’s perspective, “Why should I buy from you?”  That answer is your competitive advantage.

A sustainable competitive advantage is a long-term competitive advantage that a company’s competitors cannot duplicate or surpass.  This is what separates your business from competitors over the long term.

In the article titled “The 6 Keys To Real Sustainable Competitive Advantage” Martin Zwilling explains 6 keys to a sustainable competitive advantage.  They are:

  1. Real intellectual property
  2. A dynamic product line, rather than a single product
  3. Dramatic cost improvement for cause
  4. Proven team with inside relationships
  5. Lock on the market or customer base
  6. Strong focus and differentiation

Think about your business as you read these, and determine if any of them apply.  If none apply, why not?  Are there any that Zwilling did not mention?

Knowing this information, you may want to reevaluate your marketing message.  Are your customers aware that your company has a sustainable competitive advantage?  If you have not properly positioned your company in the market, your customers probably do not know why they should buy from you and not a competitor.

Sometimes we are to busy working in our companies that we miss the big picture ideas about our business.  Why do we do what we do?  Why does our company exist?  As company leaders, we need to know the answers to these questions.  We need to care about our company and its mission and vision.  If we don’t care about our company and have a passion for what we do, why should the customer care?

In a video, titled How Great leaders Inspire Action, Simon Sinek gives an engaging presentation describing his model of inspirational leadership.  Using the Wright brothers, Apple, Martin Luther King, and Tivo as examples, Sinek explains that people do not buy what your company does, but why your company does it.  He also encourages you to do business with people who believe what you believe.

Do you know why your company exists?  Do you agree with Sinek’s logic?

This article from Practical Ecommerce shows some things for your business to keep in mind when exporting.  The article gives helpful tips on international shipping, translating your company’s website, and considering how international customers want to pay for your company’s goods and services.

The most important thing to remember:

“If you’re serious about exporting, you’ll want to make it as easy as possible for customers to buy from you regardless of where the customer is located. To increase the number of happy customers while reducing complaints, charge-backs, and poor reviews, consider localized fulfillment. Then, as your business dictates, add localized content and other forms of payment that reflect your customers’ preferences.”

This article shows how IBM is becoming a new breed of company, a postmultinational global corporation, which is a company that has shifted some sales, strategy, and major operations outside of the US.

IBM in particular has moved from a business with finance, accounting, HR, and procurement in each country, to a business that has “set up global centers of expertise with responsibility across the company. For example, the global purchasing and procurement unit is in China; human relations tasks like expense report processing are done in the Philippines; and back-office financial processing is done in Brazil.”

During the economic downturn, IBM focused its efforts on services and software – shifting away from hardware – in markets as big as China and India, and also in smaller ones like Vietnam, the Czech Republic and the Philippines.

And we will most likely be seeing more of this style of operations. Many of the large technology companies like Intel, Apple, HP, Oracle, Cisco, and Microsoft now obtain much more of their revenue from overseas than they did 10 years ago.

This strategy has helped IBM to weather the worldwide economic downturn. Now, IBM makes two-thirds of its revenue abroad. Becoming a postmultinational global corporation has helped IBM to survive a brutal few years of business, have access to international talent and markets, and reach the next phase of competing in a global, Internet economy.

We have previously written about President Obama’s ambitious National Export Initiative.  The goal of the plan is to double exports over the next five years in order to encourage job growth.

There are obstacles to this plan, including weakness in global demand and exchange rates that make Chinese products less expensive on global markets, but we believe that ultimately the plan will help small and medium sized businesses become globally competitive.

As Michael Elliott points out in his article “The Truth About Trade“, in the long run, exports do not matter.  Instead, it is trade in general that matters most.  Using the theory of comparative advantage – which encourages economies to have different specialties, and then trade with other economies – Elliott explains that imports in particular make everyone’s life better.

This is an interesting and correct viewpoint that we have not yet seen in an article about Obama’s export plan.  Trade, including importing and exporting, is necessary for both countries and businesses to compete globally.

Think your business can’t expand globally because of cultural issues or bureaucratic red tape?  Read this article about Mr. Softee ice cream sending trucks to China.

An American working as an English teacher in China noticed that there were few places to buy soft-serve ice cream.  He recognized the need and worked to fulfill it.  As a result, he helped a regional company to become globally competitive.

The article goes on to explain how the company had to adapt.  They needed to create a new menu to fit Chinese taste buds, and they had to change the way the operations of the truck slightly, among other things.  And it all seems to have worked out for the best – since Mr. Softee trucks appeared in China three years ago, sales have doubled every year.

Alex Conway, the president of Mr. Softee China, “Dreams about Asia extend beyond China. He is thinking about expanding the company into other countries, including Japan, the Philippines, Singapore and Thailand.

“ ‘The hardest thing about establishing ourselves in China was setting up our supply chain,’ Mr. Conway said. ‘But now that it has been established and we have a solid base of operations outside of the United States, anything is possible.’”

Click here to read more.

“It is not the strongest among the species that survive. Nor is it the most intelligent. It’s those that are most adaptive to change.”

-Charles Darwin
Change seems to be the only constant in today’s global, Internet economy. How can you manage it? How can you keep up with it?

One theme we have noticed recently is the growing importance of social media in a business environment. Social media is opening new avenues to contact, to engage, and to build relationships with current and new customers. In today’s Intelligent World, social media is necessary for any business that wants to become a 21st century business. It is one part of how small companies can do so much more that they actually operate as a much larger company… they can “Play Big”. However, social media will differ in its importance to your business depending upon what you do and what your goals are.

  • What is most important is to know your business vision and your objectives for the next year.
  • What is your marketplace currently and what new markets do you need to expand into?
  • What are you trying to tell the marketplace?
  • What is the personality of your business.. the story you are telling about yourself?
  • Who is your target audience and traditionally what do they pay attention to during the day?
  • Who is your decision maker of tomorrow, and if different than above how will you reach them?

These are the important questions to ask as you get into social media, which you should do… but which media and how fast depends on these answers.

In the past two decades, a greater number of companies have found it profitable to integrate into the global economy. There are numerous reasons for this development: improved transportation technology, liberalized trade policies, international institutions to promote trade, etc. Surprisingly, it is not only large corporations taking advantage of these new opportunities, as small businesses are selling products abroad at a high rate. In fact, small businesses sell approximately 30% of the value of United States exports. Currently, less than 5% of the world’s population lives within the borders of the United States. It is no surprise that U.S. businesses of the 21st century are not content with relying heavily on domestic sales. If you are still not convinced that you should become a globally competitive business, consider these ten reasons to do so:

1. If you don’t, someone else will - All of the advantages of global competitiveness are equally true of both your company and your competitors. Keep in mind that companies that export grow faster on average than non-exporters. Also, non-exporters tend to go out of business more quickly.

2. Avoid extinction – The preferences and lifestyles of U.S. consumers today are drastically different from 10 or 20 years ago. This has led to numerous products becoming obsolete in the U.S. market. For companies not engaged in the global economy, shifting domestic consumer tastes can mean extinction; however, a globally active business has the benefit of diverse global preferences.

3. The weather is always right – If you have a seasonal product or service, the case for doing international business is especially strong. When it is winter in the Northern Hemisphere, it is summer in the Southern Hemisphere (and vice-versa). If exporting, this would allow you to sell winter products in Australia when it is 80 degrees in the U.S.

4. Foreign governments are picking up the bill- Governments will always be willing to spend money on, or encourage their citizens to spend money on, just about anything, but it may not always be your government. This should not stop you from taking advantage of a good opportunity for a subsidy or tax incentive.

5. Drive down costs – Increasing your global presence allows your company to take advantage of economies of scale. As sales increase, the per-unit cost of your product decreases. As an additional bonus, any excess capacity can be utilized with export sales.

6. Become “recession-proof” – While the recent recession essentially affected the entire globe, most recessions are less widespread. Generally, when the U.S. economy is declining, Asian and European economies are experiencing growth. A global company can thrive on its export sales during tough times, while a less globally competitive company could struggle to survive the domestic slowdown.

7. Learn from others – Companies in other countries sometimes use technologies and methods that businesses in your country have never seen before. Entering the global economy puts you in a position to learn this knowledge to improve your products.

8. It is easy – As countries realized that international trade brings tremendous benefits, free trade agreements and low barriers to trade became the norm. This occurrence has made entry into foreign markets even easier.

9. Increase your buying power – If you own a small business, you likely have little bargaining power when buying inputs for products. Selling abroad will increase your sales, making you a larger purchaser of these inputs. This may provide you that desired bargaining power.

10. Exporting is fun – Interacting with various people and different cultures across the globe may be the biggest upside to selling internationally. If you are too busy to travel for leisure, international business opportunities could be the perfect excuse t o visit new places.

Convinced yet? If not, these are only ten of the vast number of reasons why a company should become globally competitive. However, not every company is prepared or suited for this. Nevertheless, merely investigating whether or not international business makes sense for your company does no harm. Remember: small businesses are well-suited for the global economy, as over 66% of U.S. exporters employ fewer than 20 people.

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