Dr. Rick Franza, Professor of Management at the Hull College of Business, discusses a different, timely business topic each Monday in this column. This week, he talks about taking part in the global economy. The interview has been edited for clarity and impact.
ABD: We often hear about the need to take part in the global economy. How do you define the term “global economy?”
Rick: The term global economy is redundant. All business is international now, all economy is global. You can’t isolate your economy.
There are raw materials that we depend on that we get from other countries and it’s a whole lot cheaper to get certain things from other countries. And we have a large surplus of agriculture that we need foreign markets for. You’d be hard-pressed to find any manufacturer who doesn’t have supply and distribution channels outside of the United States.
ABD: A few years ago, we saw what can happen when the supply chain gets snarled. Is that one of the drawbacks to a global economy?
Rick: The pandemic brought that home to us. Something can happen in some other country, whether an event of nature, a strike, or a change in the economy of another country that affects us. On the supply side, you want to think about having multiple suppliers and make sure they don’t get all their materials from the same source.
ABD: Often when people start a business, they’re just thinking about bringing in people from their own area. How does a business think about expanding into the global market?
Rick: In distribution, for example, if you’re a restaurant, say you have a unique barbecue sauce, you can sell it now globally because it’s easy to move products around the world. It may not be that unique to us in the United States, but if someone isn’t already exporting it to other countries, you may want to explore those markets. You may be limiting yourself if you just sell locally or nationally.
The internet is probably the prime way of reaching international markets. Marketing can be done through various social media that are available worldwide.
ABD: How do you know if your product is unique or wanted in another country?
Rick: Just like you do with the local market, you have to do a market analysis. Ask, What unique value am I adding? Where are the customers? Do all the things you’d do if you were just doing local or domestic business. You have to find out if the need exists or else convince them of the need for your product.
Make sure to find trusted distributors. Regulatory issues in foreign countries are important, too. If there is an issue, find out where that is settled, so engage in some legal assistance.
ABD: If you’re thinking about marketing to another country, would it be wise to travel there first?
Rick: I would think so. If you have the wherewithal to do it, absolutely. It’ll help you understand the markets. Seeing is believing.
ABD: What about becoming a U.S. distributor for a product made in another country?
Rick: That has the same risks, but you worry less about getting it over here. With manufactured goods, it’s not that difficult. This may often be an even better idea because we, as Americans and Georgians, understand our own markets better.
ABD: In the past several years, politicians have talked about the need to bring more manufacturing back to the United States. How does that play into the global market?
Rick: There’s a difference between reality and what they want you to believe. I’ll go back to what I said at the beginning, there’s no way to isolate yourself. You can say all you want about producing more here, but it runs the risk of picking “winners,” and the government is the worst at picking winners.
ABD: You’ve talked about the global market in terms of products, but can services become part of the global market, too?
Rick: In many services, the customer has to be present, but with video conferencing programs you might be able to do it long distance. You have to do your due diligence. The question is, what is your distribution channel and is it available to diverse markets? For example, for the longest time, the mental health industry had to be local and meet face-to-face, but not anymore. It does a huge business virtually.
ABD: So, is all economy now a global economy?
Rick: We should stop using the term “global economy” – it’s just the economy. Because the technological world keeps shrinking, the economy can no longer be described as global.