Last week I spoke about expanding business into emerging markets and Latin America’ at a local trade seminar hosted by the Monterey International Trade Association. The seminar was followed by a luncheon address by Congressman Sam Farr (CA) regarding current international trade agreements awaiting Congressional action.
I opened the seminar with comments about why, given the current financial crisis, there are opportunities for business expansion in emerging markets. As reported recently in the Economist magazine, the more conservative banking strategies employed by emerging market governments over the past several years (largely as a result of too agressive banking policies in preceeding years) has resulted in large cash positions allowing banks to stay liquid and governments to stave off runs on their currencies. At the same time, since world GDP growth over the past 30 years has been driven by capital movements – which have now ceased largely – trade is a more important variable to driving economic growth in emerging economies.
In addition to speaking to the participant companies about how (i.e., planning, prioritizing and adapting the marketing mix), I also reminded them why firms shoudl consider an international expansion strategy. There are two drivers, competition (i.e., survival) and growth. In today’s world, if your business faces stiff home market competition one way to alleviate the pressure is to exmapnd into new markets. Alternatively, if you are growing, you also should consider international expansion. After all, if you don’t channel your growth into future returns, you may find yourselves in survival mode sooner than you might like.