Global

Global
Opportunities
Opportunities for
for
Entrepreneurship
Entrepreneurship
 Why Go Global?
Offset sales declines in the domestic market
Increase sales and profits
Extend products life cycles
Lower manufacturing costs
Improve competitive position
Raise quality levels
Become more customer-oriented
Economic of Scale
Politic stability
New technology and Know How
 Definition International
Market
Marquardt and Engel (1993 :295)

In the new Millennium, every industrial

Country will have this same hit parade of
technology Microelectronics,
Biotechnology, New Material (ceramic,
plastic, and composites),
Telecommunications, robotics and machines
tools, and computers and software. The
result will be global head to head
competition in every major market
Strategies For Going Global
Launching a World Wide Web site
Relying on trade intermediaries
Joint ventures
Foreign licensing
International franchising
Counter trading and bartering
Exporting
 Internet Users Worldwide by Region

Other Regions
3.0%
Latin America North America
5.3% 31.3%
Asia/Pacific Rim
31.6%

Europe
28.9%

Source: United Nations Conference on Trade Development, E-Commerce and Development Report 2002, p. 8.
Three-Step Evolutionary
Approach
1. Connecting to e-mail
2. Using the Web to conduct
international market
research
3. Building a globally-
accessible Web site
Trade Intermediaries
Export Management Companies (EMCs)
Export Trading Companies (ETCs)
Manufacturers Export Agents (MEAs)
Export merchants
Resident buying offices
Foreign distributors
 Methods of Going
International

Exporting
Jont Ventures
Licensing
Franchise
Joint Ventures
Domestic joint venture two or more Malaysian
companies form an alliance for the purpose of
exporting their goods and services abroad.
Foreign joint venture a domestic firm forms an
alliance with a company in the target nation.
Most foreign joint ventures fail; average success rate is
just 43%. (in U.S.)
Most important ingredient: choosing the right partner.
2nd key: establish common objective
 Exporting
SMEs companies account for on 16.6% of the
total export value of RM 229 billion in 2003 and
they generate just RM 38 billion of the nations
exports (based on Bank Negara SMEs Survey
2005).
Only 8% of all small and medium-sized
businesses export their products (based on Bank
Negara SMEs Survey 2005).
 Steps to Successful Exporting

1. Recognize that even the tiniest companies

and least experienced entrepreneurs have
potential to export.
2. Analyze your product or service
3. Analyze your commitment to developing
export markets.
4. Research potential markets and pick your
target
 Steps to Successful Exporting
(continue
d)

5. Develop a distribution strategy.

6. Find your customer.
Ministry of International Trade and Industry
(MITI)
Malaysian External trade Development
Corperation (MATRADE)
7. Find financing for export sales.
8. Ship your goods.
9. Collect your money.
Licensing
To sales with permission for produces or to
markets of product brands, property right.
Patent, and processing to produce
production.
Licensing given to firm for operate
certain area, District or State.
Fees of royalty between buyer and
supply license.
Franchise
Same like licensing but franchise is a
packages of business entities, facilities, rule
of
management, services, and Advertising
The firm agreed to give sum of fees to
Franchisor and
must followed the rules and regulation.

Example. KFC, McDonalds. Pizza Hut and 7 -

eleven
 How a Letter of Credit
Works.
Seller Buyer

Foreign buyer agrees to buy products; Seller ships goods to buyer

seller agrees to ship goods if buyer according to letter of credits
arranges a letter of credit. terms and submits shipping
documents to bank issuing
letter of credit.

Sellers Bank Buyer's Bank

$ Letter
$ $
of Credit

Buyer requests that his bank grant a
letter of credit, which assures exporter
payment if she presents documents
proving goods were actually shipped.
Bank makes out letter of credit to seller
and sends it to sellers bank (called the
confirming bank).
Buyers bank makes payment
to sellers (confirming) bank.
Confirming bank then pays
seller amount specified in
letter of credit.
Barriers To International Trade
Domestic
Barriers:
Attitude My company is too small to
export.
Lack of information about how to get
started.
Lack of export financing.
Barriers To International Trade
(continued)

International Barriers:

Tariffs - taxes a government imposes

on goods and services imported into
that country.
Quotas - limits on the amount of a
product imported into a country.
Embargoes - total bans on imports of
certain products.
Barriers To International Trade
(continued) International Barriers:

Dumping - Selling large quantities of a

product in a foreign country below cost
to gain market share.
Political barriers - rules, regulations
and risks.
Cultural barriers - Differing languages,
philosophies, traditions, and accepted
business practices.
 International Trade
Agreements
Major Agreements:
General Agreement on Tariffs and Trade (GATT)
World Trade Organization (WTO)
The North American Free Trade Organization (NAFTA)
The European Union (EU)
Japan and Asia
Asian Pacific Economic Country (APEC) Japanese
and Chinese ,Four tiger/dragon Korea,Taiwan.
Singapore and Hong Kong
ASIAN Free Trade Agreement (AFTA)
 The International
Environment
Global thinking is important because
todays consumers can select products,
ideas, and services from many nations and
cultures.
The Global Entrepreneurship Monitor
examined 29 countries representing
approximately 2.5 billion people. In the 29
countries, at any point in time,
approximately 150 million people were
involved in starting and growing new firms.
The World Trade Organization

The World Trade Organization (WTO) was

established on January 1, 1995.
The World Trade Organization (WTO) is the only
global international organization dealing with the
rules of trade between nations.
At its heart are the WTO agreements, negotiated
and signed by the bulk of the worlds trading
nations and ratified in their parliaments.
The goal is to help producers of goods and
services, exporters, and importers conduct their
business.
World Trade Organization
Essentially, the WTO is a place where
member governments go, to try to sort out
the trade problems they face with each
other.
At its heart are the WTO agreements,
negotiated and signed by the bulk of the
worlds trading nations.
But the WTO is not just about liberalizing
trade, and in some circumstances its rules
support maintaining trade barriers for
example to protect consumers or prevent
the spread of disease.
Official website: www.wto.org
 World Trade Organization
The WTO agreements are lengthy and complex
because they are legal texts covering a wide
range of activities.
They deal with: agriculture, textiles and
clothing, banking, telecommunications,
government purchases, industrial standards
and product safety, food sanitation regulations,
intellectual property, and much more.
But a number of simple, fundamental principles
run throughout all of these documents.
These principles are the foundation of the
multilateral trading system.
The North American Free Trade
Organization

The North American Free

Trade Agreement (NAFTA) is
an international agreement
among Canada, Mexico, and
the United States whereby
eventually no trade barriers will
exist among the three nations.
 NAFTA
In January 1994, Canada, the United States
and Mexico launched the North American
Free Trade Agreement (NAFTA) and formed
the world's largest free trade area.
The Agreement has brought economic
growth and rising standards of living for
people in all three countries.
NAFTA
NAFTA has enabled both Canada and
Mexico to increase their exports to the
United States: Canadian manufacturers
now send more than half their production
to the U.S., while Mexicos share of the U.S.
import market has almost doubled from
6.9% in pre-NAFTA 1993 to 11.6% in 2002.
Manufacturers in all three countries are
better able to realize their full potential by
operating in a larger, more integrated and
efficient North American economy. In 2002,
Canada was the most important
destination for merchandise exports from
39 of the 50 U.S. states.
 NAFTA
Following a final tariff reduction between
Canada and Mexico, which took effect on
January 1, 2003, virtually all trade in the
NAFTA region has flowed tariff-free.
 The European Union

The European Union (EU)

was founded in 1957 as the
European Economic
Community and in 1992
became a full-fledged
economic union.
 The European Union
The European Union (EU) is a union of
twenty-five independent states based on the
European Communities and founded to
enhance political, economic and social co-
operation.
Formerly known as
European Community (EC) or European
Economic Community (EEC). Date of
foundation: 1st November, 1993.
Objectives of The European
Union
1. The elimination of custom duties among all
members states,
2. The free flow of goods and services among all
members,
3. The creation of common trade policies toward
all countries outside the EU,
4. The free movement of capital and personnel
within the bloc,
5. The encouragement of economic
development throughout the bloc,
6. Monetary and fiscal coordination among all
members.
 Japan and Asia
Japan is the richest country in Asia.
Four Tigers: South Korea, Hong Kong,
Singapore and Taiwan have arrived as major
economic powers.
 ASEAN Free Trade Area
(AFTA)
AFTA is a free trade zone in Southeast Asia
where member countriesinclude Malaysia,
Singapore, Thailand, Philippines, Indonesia,
Vietnam, Laos, Myanmar, Cambodia and
Brunei. The AFTA agreement supports the
effort to relax trade barriers amongst
member countries in order to achieve direct
trade benefits.
Malaysia 's objectives in being a member
of the AFTA are to:

Seek better market access by addressing tariffs

and non-tariff measures;

Further facilitate and promote trade, investment

and economic development;

Enhance the competitiveness of Malaysian

exporters; and

Build capacity in specific targeted areas through

technical cooperation and collaboration.
Malaysian companies will be able to
benefit from:

preferential access into the larger market of

ASEAN with a population of 530 million;
a wider base for competitive sourcing of
raw materials from countries in the region;
and
opportunity to cooperate and collaborate
with ASEAN partners to tap both the regional
and global markets.
Malaysian companies will be able
to benefit from:

Tariff reduction/elimination under AFTA is

granted on a reciprocal basis. Member
countries can enjoy the lower tariff under
AFTA only if they also offer tariff reduction
for the same product and comply with local
content requirement.
AFTA Disadvantages
Impact on Malaysian Industry:
Increase intra-ASEAN competition from lower
cost producers.
Declined competitiveness of traditional export
industries:-
. High labour cost
. Lack of resources and expertise
. Technology obsolescence
Removal of protection e.g. AP, quota system,
monopoly status.
Complying with 40% local content rule.
 AFTA Disadvantages
Develop competitive local Small and Medium
Industries:-
. Too focus on domestic market
. Heavily dependent on single or few buyers
. Lack of expertise and backward technology
Sectors that may face strong competition:-
. automotive-iron and steel
. ceramic tiles
. cement
. Plastic products.
 Guidelines For Success In
International Markets
Make yourself at home in all three of the worlds
key markets - North America, Europe, and Asia.
Develop new products for the world market.
Familiarize yourself with foreign customs and
languages.
Glocalize - make global decisions about
products, markets, and management, but allow
local employees to make tactical decisions about
packaging, advertising, and service.
 Guidelines For Success
In
International
Train Markets
employees to think globally, send them on
(continued)
international trips, and equip them with state-of-
the-art communication technology.
Hire local managers to staff foreign offices and
branches.
Do whatever seems best wherever it seems best,
even if people at home lose jobs or
responsibilities.
Consider using partners and joint ventures to
break into foreign markets you cannot penetrate
on your own.
THANK YOU FOR YOUR
ATTENTION!