The rise of international business and secrets behind international trade
The UK is the fifth largest trading nation in the world. In order to maintain this status, we rely heavily on international trade, leading to businesses of all sizes looking into it as part of their step-in growth. But finding success in the international market can prove challenging for both SMEs and big brand businesses alike.
In 2017, there were an estimated 340,500 UK businesses trading internationally, which only accounts for 14.3% of UK businesses altogether. Of these, 236,000 are considered SME’s and in 2018, this figure rose 6.6 per cent — despite, or perhaps spurred on by concerns over Brexit. As with any business model, there are advantages and disadvantages to international trade. In this article, we’ll be highlighting the key areas businesses need to consider if they hope to make it on the international market.
Learning from the past
One sure-fire way to success is to review and learn from past attempts. Many brands have approached the global market, to varying degrees of success:
Building a worldwide reputation: Houghton International
Houghton International was founded in 1984 by Ron and Christine Mitten, and its initial purpose was to supply coils to Portland Electrical Repairs in Nigeria. After just four years of steady growth, thanks to their focus on speciality work, the company was able to move to larger premises. Soon after, the company won a contract with a firm in Hong Kong, which provided a valuable foot on the ladder in terms of international growth.
The growth took Houghton International to its current base In Newcastle upon Tyne. By ensuring every order was fulfilled to the highest quality, the company was able to stand out and build strong relationships with its clients. The process has certainly paid off: between 1984 and 1994, Houghton International’s customer count went from one to over 400.
The global reputation of Houghton International had grown steadily over the years, until it secured a lucrative business opportunity across the Texas oil market. Then, in 2001, the company was part of the UK’s top 100 fastest growing companies as listed in the Financial Times.
The several years of continued growth saw Houghton International being recognised as a winter of the Services category in the North East Business Awards. The company had further expanded its range of services to include a dedicated pump repairs service and testing.
Missing the mark: Walmart in Europe
It would be poor judgement to call Walmart’ global venture a failure, seeing that they have stores across Africa, Canada, China, Japan and of course, the US. But the company did rather spectacularly misjudge their attempts to break into the European market when it set up shop in Germany.
It displayed a true example of why reputation and brand image can carry a business so far. Undoubtedly Walmart had a consistent process, but sticking it too rigidly meant they lost out on the German market when their American style clashed with German tastes. For example, in a country renowned for its love of efficiency, having someone else bag your groceries did not sit well with customers. Plus, while Walmart is famous for its overly-enthusiastic greeters and smiling staff, these things didn’t translate well in Germany, or in Europe in general where people are little more reserved and favour personal space. By 2006, Walmart was left with no choice but to cut its $1 billion losses and leave the German market.
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The secret behind the success of international trade
By comparing the differences between Houghton International and Walmart, we can establish key takeways for other SMES looking to jump into the international market.
Key findings include:
Reputation building: Even in a digital age, word of mouth is a powerful thing. Small contracts can still make big waves, so by ensuring your business completes every contract to the highest standard, word will soon spread among the industry of your business name.
Consistency: Your business must deliver results consistently. Fair or not, many successes can easily be tarnished by one oversight, and clients will certainly speak of such negative experiences far louder than they would of positive experiences.
Growing within means: Being eager to grow as a business is fine but biting off more than you can chew will only lead to mistakes, impacting your consistency. Keep your short-term goals in mind as much as your long-term goals, and don’t be put off by going at a slower pace if needs be.
One size does not fit all: Consistency is one thing when it comes to quality, but don’t mistake that as sticking rigidly to processes and service delivery. What lands well for an Australian client may not fly for a customer in Poland! It’s important to understand the cultural nuances of your prospective clients before you try to enter that market — failure to do so simply exposes your business as lacking awareness.
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