When it comes to the issue of international trade and the competitive advantages and disadvantages companies face overseas, there is no uniform agreement over who suffers more and who is doing better. The United States, as a country, has a balance of trade deficit of a little more than $40 billion as of October 2013. This, according to the U.S. Department of Commerce’s Bureau of Economic Analysis, is based on the amount of goods and services produced and exported by U.S. companies overseas versus the total imported domestically.
Traditionally the U.S., as the world’s largest marketplace for consumer goods and services, has had a low rate of savings. Comparatively speaking, while the national savings rates for countries like Canada and Germany increased between 1998-2008, in the U.S. the rate fallen by one-third over the same period of time. These statistics raise a few questions: where in the world are American companies doing the best, what are the factors that place U.S. companies at a disadvantage relative to their global competitors and what do U.S. companies need to do to improve their competitive situation?
Where U.S. Companies Fare the Best
Fast food and soft drink companies have traditionally done well internationally. In fact Yum! Brands (Taco Bell, KFC, Pizza Hut, WingStreet, A&W and Long John Silver restaurant brands), McDonald’s Corporation, and Burger King have made gains in India and China, with KFC becoming the fastest growing major chain in India in 2012.
Although many of the countries in the European Union have begun to recover from the effects of the global recession of 2009 and individual austerity measures meant to curb spending, opportunities for development have increased in emerging markets in Africa, Asia and South America as well.
Where U.S. Companies Are at a Competitive Disadvantage
Local restrictions imposed by anti-competitive governments can place a business at a competitive disadvantage. An example of this is the case of Google, Inc. and the government of China. Censorship laws in the country pose restrictions that threaten Google’s business in China. The company abandoned a 30% share of the country’s Internet search engine market after reaching an impasse with the Chinese government over its censorship policy.
What U.S. Companies Need to Do to Improve Competitively
In order to improve their competitiveness overseas, U.S. companies need to understand the differences inherent with doing business in international markets. Accountants, lawyers, and other professionals who work with and advise companies in the U.S. have often spent little to no time in a foreign country. As an example, 1% of U.S. college students in the 2008-09 school year spent time studying abroad, 40% of whom studies in England, France, Spain and Italy. Very few students spent time in emerging markets like Brazil, China, India and parts of Africa.
Understanding the business landscape in a foreign market, as well as its language and customs is also important. Entering into exclusive distribution arrangements with a local company limits the availability of your products or services. The same holds true for joint venture agreements. Communicating your company’s code of conduct and acceptable practices is also important in order to maintain a uniform system of compliance and ethics with international laws and to avoid irreparable harm and damage to your company’s reputation.
This article was provided by Mike Gordon, young entrepreneur and small business owner. One of the keys to a successful franchise is expanding your reach and having more costumers experience your products and services in more areas. If you’re a company looking for a trusted refrigerated shipping option to get your perishable goods around the country, Mike recommends Diamond Transport, Inc.