International Business Organization

International Business Organization

Export/International business can take on many challenges as it unfolds. Goal should be to construct the company’s strategic building blocks, using it’s assets to support international opportunities. The outline is formatted from a more basic approach, increasing through stages of complexity. There will be points below that overlap and dovetail. Some corporations may have already touched on many of these points. The examples below are geared toward the food/protein industries. Nevertheless, the concepts are transferable to many others. Below are organizational ideas for consideration:

I. International Business Unit Establishment- Create P&L.
A. Budget to encompass 3-5 key trade shows and conferences that support the geographic strategy.

- Restaurant Chain Shows (Subway, McDonalds, etc.)- Important shows that demonstrate a company’s willingness to globally expand with the chains.

- Distributor Shows.

- Trade organization conferences. Provide key insights to new emerging markets and trends i.e., USMEF, USDEC, etc.

B. Forecasting- By product category and market to determine business profitability.

C. Expenses- Identify expenses against the business. Be fiscally prudent.

II. Geography- Are the most immediate markets being efficiently addressed by export? Begin with the immediate opportunities i.e., target nearest or import friendly international geographic markets.

A. Canada-

B. Mexico-

C. Caribbean-

D. Domestic Exporters-

III. Export Product Portfolio- Product’s export potential? What are the popular US items sold? Using meat products as an example:

A. Pork- More than likely highest export potential.

B. Poultry- Certain drawbacks (Avian viruses), but often has the necessary price points for market entry.

C. Beef- Still questionable into many overseas markets (BSE). Slowly improving.

D. Other- Veal and lamb offer the specialty items often sought in many of the smaller boutique markets i.e., Caribbean. Should be a high margin opportunity?

IV. Utilize and maximize current customer base. Grow internationally with domestic customers.

A. Chains- What chains are currently being serviced (i.e., McDonalds)? What are the int’l springboard applications of those chains?

B. Distributors- GFS,US :: GFS, Canada; Sysco, US :: Sysco, Canada…Sysco, Export
C. Schools- Offer products supplied to the US to Puerto Rico. Puerto Rico, Virgin Islands and Guam have same requirements.

D. Retail.

V. Expand Geography- Be first in emerging markets. Chains, trade organizations and trade shows will assist in breaking into new venues.

A. Australia, open to US pork imports. US plants must be Australian approved.

B. Brazil and Argentina- as economies improve, so should pork imports.

C. Middle East- Israel.

D. Asia- SE Asia, Latin America.

VI. Product adaptation-

A. A commitment to international product customization. Overcome import non-tariff barriers through product modification.

B. As point “A” is evaluated, determine volumes and pricing with the customer completing the value proposition.

C. New protein introduction- Growing US Hispanic community looking to satisfy traditional diets i.e., goat. US ranchers begin to emerge from their traditional ranching habits to fill a consumer need. Shift creates new export opportunities.

D. Profit Margin/Revenue Growth- Theoretically, there is no competition for custom production and margins should reflect business value.

VII. Resource utilization-

A. R&D efforts to meet a qualified opportunity. Example, a 51% breaded product can be exported to Canada vs. a product with less than 50% breading.

B. Account Managers- Joint calls on corporate to further support the chains international expansions.

Distributor Managers- Joint calls in evaluating immediate opportunities extending across borders.
C. School Managers- Joint calls in US territories to expand and maximize product presence.

VIII. International Partnership Arrangements. Partnering/Joint Ventures with like businesses overseas. Some ideal targets are Japan, Australia, Mexico, China. Key defining terms…product novelty, business profitability, uniqueness, pricing, product demand, market distribution, language understanding, product understanding. If there is a commitment from an overseas manufacturer who understands the product/species, but lacks certain manufacturing capabilities, a partnership should be suggested.

A. Responsibility considerations :

o Raw Material Hedge

o Currency Hedge

o Brokerage Agreement

o Time lines

o Production Capacity

o Legal contract/Export Insurance

B. Partner’s Responsibilities:

o Volume Projections

o Co-Pack Agreement

o QA Plant Approval

o End User Presentations

o Stand-by Letter of Credit/Purchasing Contract

o Exclusivity

o Currency Hedge

o Other product opportunities

Notice currency hedge may fall under both and is open for negotiation. It depends on relationship’s strength. Many times it should be for the account of the partner. An exception may be made to consummate the deal, or as a long term service insuring a yearly contract renewal.

IX. Licensing- Often used as a barometer in evaluating potential opportunities and minimizing immediate risks.

A. Brand Licensing- What is the true value of a certain brand in an international market? Would be determined by the partner company in that country.

Example. What was the value of the Parkay brand in Canada? Became the second best Canadian margarine brand. Produced by Parmalat in Canada. Brand was licensed by ConAgra US.

B. Technology- Minimizes capital overseas investment, while transferring US production technology.

X. Mergers and Acquisitions- Up to this point a corporation may be supplying and evaluating their export potential. Simultaneously, it should be considering the business worthiness of certain key markets. Ultimately, it may consider investment in those markets.

A. Partnership/JV company may be ripe for buy-out.

B. Margin potential internationally warrants an acquisition for corporate diversification purposes.
C. Many similarities i.e., language, business culture, profitability, increased product demand from growing middle class, business supporting political environment.

D. Overcome stringent food import barriers i.e., EEC. Example- Companies have improved international exposure, opening manufacturing plants within the EEC. An example has been the recent purchase of Sara Lee European brands by Smithfield.

XI. Summary- These idea compilations are based on 20 years of international business experiences with four major corporations and an MA in International Business. No one size fits all. The outline can be used to build new profitable opportunities that may not otherwise have been realized or fully exploited.

RICHARD J. PORWIT has been an International Sales and Business Director with extensive food and CPG experience, including new product development, market growth, profit and loss accountability in retail, food service and business to business markets. Consistently known for exceeding set goals, division turn arounds, with cross-functional team leadership in customized product development. Recognized for ability to establish and expand international markets in Asia, Latin America/Caribbean, and the Middle East.

Sales Management and Business Development Strengths are:

• Building Customer-Centric Relationships
• New Product Development
• Food service development and management of distributors and brokers
• Retail brand establishment and marketing focused on value-added brand attributes
• ROI Based Decision Making
• Strategic Planning with executional excellence

In the UK and America there are a multitude of ways to gamble. Exorbitant sums of money are involved with respective governments receiving substantial income in the form of taxes. Socially, gambling has been exposed to opposition morally and singled out legally as a corrupt trait in some societies. Never the less gambling continues to rise as a major form of relaxation and as a way either, legally or illegally, of making money.

As long as there have been human beings gambling, or games of chance as they are commonly known, has been in existence. It was around the mid thirteenth century that dice first came to prominence in Greece, although a similar form of entertainment was used by the Ancient Egyptians called “Knuckle bones.” Playing cards were first attributed to China in the ninth or tenth century. They were then taken up by Europeans in the fourteenth century, probably Italy, using a pack with 78 cards. It was a hundred years later before the standard pack of 52 cards became accepted as the norm. But as well as these games, betting on sports such as horse racing and dog and cock fighting enjoyed popular appeal. In all of us there is a the appeal of winning money for little or no effort but, there are still mixed feelings toward the various forms of gambling available today.

Religion is prominent in many societies today. In some it is more dominant than politics and influences many of the decisions governments make. In fact many religions condemn gambling. Although Catholic countries were the first to start playing lotteries seriously. It is the fact that gambling can be attributed to greed and corruption and can be the downfall of many that fosters the beliefs of the anti-gambling faction. Gambling has also been linked to alcoholism with many games of chance taking place in public houses. The fact that drinking alcohol can also be associated with violence and lust does nothing to help the pro gambling lobby. The fact also that there are winners and losers with the winners gains offset by the loser’s losses (although the poker games I have played in this never works out!).

Here in the UK things are a bit more relaxed. Have a look at these figures:

8% of adults play bingo

11% of adults use licensed betting shops

62% of all households play the National Lottery on a Saturday

33% play on a Wednesday

The above figures were taken from Social Trends 1998 so today those figures could be considerably more. John Wesley, the founder of the Methodist Church, had forthright views on gambling. He said “that a Christian should be a steward of money and not own it” and “money should not be gained through means which could harm one’s neighbour” i.e. pawnbroking or charging excessive interest on loans.

Not everybody connected with religion has taken such a stance. The soon to be Anglican Bishop of Exeter, Robert Mortimer, said in 1933 that not all forms of gambling were immoral. He actually did some research into the various forms and decided that some forms of gambling were a “legitimate indulgence” which no institution had the right to ban completely.

In 1948 an international congress of Anglican Bishops were concerned about the after effects of gambling on not just gamblers but their families as well. In fact, when Premium Bonds were first introduced in 1956, the Archbishop of Canterbury, Geoffrey Fisher, condemned them as private gain divorced from responsibility.” This was backed up by the then shadow Chancellor, Harold Wilson, as a”squalid raffle.”

Many governments now take a back seat when it comes to deciding issues on gambling, realising than prohibition would condemn the problem to underground activities, therefore losing revenue.

One more point in gambling’s favour. As early as 1569 it was used as a means of raising funds for public projects.

So there it is, not all forms of gambling are bad.In fact some are quite therapeutic. As long as indulgences are not taken to excess there is not much harm done. It is when gambling takes over one’s life that problems arise. The motto is “know your limits and stay safe”.

Political leaders are approving gambling establishment developments in hope to raise needed revenue with out consequence to their constituents. Political leaders are aware that a significant number of people already have a problem gambling and the likelihood of more people developing an addiction is likely to increase. It’s unfortunate but these same leaders refuse to do anything about it since the increased revenues from the gambling establishments helped to fund many state needed programs.

Political leaders look at the short run, because they are continually being tested to see what they can do for their voters. These leaders are not elected for life and usually serve for two years unless they are elected again. Once they are up for re-election they tell the voters this is what they have accomplished during their term. It’s unfortunate but these gambling establishments slowly deplete the economy. By the time all the negative affects are felt either the political leader is no longer in office, up for re-election with all new promises or another source of revenue is found. This political game continues until enough people put pressure on their leaders. Problem gambling is a silent addiction and very few people are willing to admit they have a compulsive gambling addiction, lost all their money to gambling, stole from their employer so they could gambling and or are embarrassed to let their love ones know they had a problem. Once again the political leader win and their voters and the local economy lose.

People are gambling excessively. A gambling establishment could not expand at the rate they are growing if people weren’t losing their money. These same people cut their spending at their local shopping centers, personal entertainment like movies and cut spending for everyday staples. I met one mother who stopped buying milk. She figured she could save twenty dollars a month and this would give her more resources to gamble. Now that she stopped she can’t believe that she could do such a thing to her family.

The gambling establishments created an empire. They opened gift shops, entertainment concert halls, gas stations and unique restaurant inside their entertainment complex. They give every patron a tracking card that earns them points only valid at their gambling complex while they gamble. They then use these points to eat, entertainment, hotel and or purchase gifts. This past holiday a significant number of people saved some of their points to buy family gifts. Once again the gambling establishments win and the local businesses and shopping centers lose.

Not everyone has a gambling addiction, but a good majority of people enjoy recreational gambling. It’s unfortunate but even a casual gambler gambles more then they expected. These casual gamblers people also will have to cut back their spending for a short time. They may not go out to their local diner because they cn eat for free at the gambling establishment. In all these situations, the local economy suffers. People who live with in fifty miles of a gambling establishment are more like to be negatively affected.

It’s time to find a solution to this growing epidemic. Political leaders need to step up to the plate and stop the abduction of the people. Recently their have been a significant number of commercials dealing with gambling addiction. Everybody applauded this first attempt to deal with gambling addictions. Unfortunately it appears the leaders are too late. An acre of land on fire can not be distinguished with a cup of water.

The only solution to stopping the problem gambling is to regulate the gambling establishments and or consider closing them down until a solution is found. No matter which direction the political leaders choose they need to pick up their pace.

Mr. Howard Keith has an extensive background in dealing with compulsive gamblers, relatives and friends of gamblers and teenage gamblers. Mr. Keith believes there are many alternatives to aid in the recovery of a gambling addiction verses a twelve step program. A large percentage of his emails were from compulsive gamblers looking for an alternative to Gamblers Anonymous and twelve step programs. Gamblers Anonymous also helps a significant number of people each year but there is a large percentage that they are unable to reach. For more information on gambling addiction and stop gambling you can check out