Much has been written about the importance of being informed:
“Knowledge is power.”—Francis Bacon
“An investment in knowledge pays the best interest.”—Benjamin Franklin
“Knowing is half the battle.”—G.I. Joe
Whether you’re an English philosopher/scientist, a U.S. founding father, or an animated American hero, the message is simple: information = good; ignorance = bad. When it comes to the global marketplace, however, it’s clear that most manufacturers are not as well informed as they should be. Even if you’re not internationally active, it’s still important to be internationally aware. Here are some items to consider as year-end approaches and you think about your business strategy for 2013 and beyond.
If you’re not an internationally active company, why is international awareness so important? Because your supply chain may be internationally active. It’s critical that organizations understand their supply chains at least two levels down, if not three. This is significant not only to ensure quality standards but also to gauge any potential global business disruptions. Tragedies like the tsunamis in Japan or the current economic issues in Europe can cause significant issues or catch businesses off guard. There are supply concerns as well; for example, if any part of your supply chain relies on rare earth metals, then you know that they exist largely in China. If China decides to decrease its exports, then demand, and subsequently costs, will increase. That’s why it’s critical to stay abreast of what’s happening in other countries, politically and economically; if you’re informed, you can put a plan in place more quickly to address these kinds of issues.
Currency is another concern. Clients who buy and sell in dollars often feel insulated from currency changes; however, if you look down the supply chain, if there’s exposure to other currencies, it will affect your dollar pricing. Understand where you have exposure to cross-border transactions within the supply chain, and monitor on your dashboard currency, economic, and political issues that underlie the country with whom you indirectly do business.
Another reason to be internationally aware is technology. It’s easy to assume that the United States and Europe continue to have the most advanced technologies. Because of the growth occurring in markets like Russia, China, and Brazil, however, that’s no longer necessarily true. These countries have made significant advancements in technology. If you’re not attending industry shows or reading trade magazines that cover or are published in these growth markets, you could be caught flat-footed by advancing technologies that seem to appear overnight but, in actuality, have been looming for some time.
For example, let’s say you’re focusing on battery technology and wind energy. It’s important to know that China has made very significant investments at the government and university levels in supplementing research and development of those technologies. Failing to understand and monitor these developments could mean big problems down the road.
So where do you go to inform yourself on these issues? Community banks publish a lot of good information, particularly on currency and cross-border trade issues. Law firms, trade advisory companies, and the U.S. Department of Commerce are also good sources. And, as always, we at Plante Moran Global Services are here to help. If you have any questions, please feel free to let us know.
For Internationally Active Companies: a Year-End Checklist
If you are an internationally active organization, now is the perfect time to look outside and plan for next year.
- Complete a year-end assessment of your global positioning. What’s your global market share? Where could you be selling? Who are your largest competitors, and in what markets do they reside? Where do they stand technologically?
- Assess your organization’s international awareness. This includes experience and knowledge of export regulations, cross-border logistics, indirect taxation (duties, tariffs, value-added taxes, etc.), foreign receivables and foreign credit issuance, and general global savvy.
- Consider legal issues, such as trademark status and intellectual property protection within the United States and beyond.