Small Business Management, 18e Longenecker/Petty/Palich/Hoy © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Global Opportunities for Small Business Chapter 18 © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Learning Goals:  Describe the potential of small businesses as global enterprises.  Identify the basic forces prompting small companies to engage in global expansion.  Understand and compare strategy options for global businesses.  Explain the challenges that global enterprises face.  Recognize the sources of assistance available to support international business efforts. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Small Businesses as Global Enterprises  Globalization The expansion of international business: Converging market preferences Falling trade barriers Integration of national economies.  Born-Global Firms Small companies launched with cross-border business activities in mind Size does not necessarily limit a firm’s international activity—small companies can build upon their unique resources to become global competitors. 18–4© 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Where in the World Are Entrepreneurial Companies Doing Business?18.1 © 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use. Questions to Consider Before Going Global18.2 Questions Before Going Global  What are management’s objectives? Reasons, commitment, expected payoff  How prepared is management to go global? Expertise, responsibility for and time allocated to international operations, organizational structure 18–7 © 2017 Cengage Learning. All Rights Reserved. May n ...

1. Small Business
Management, 18e
Longenecker/Petty/Palich/Hoy
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license
distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
Global Opportunities for Small
Business
Chapter 18
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or
service or otherwise on a password-protected website for
classroom use.
Learning Goals:

2. global enterprises.
companies to engage in global expansion.
for global businesses.
face.
istance available
to support international business efforts.
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or
service or otherwise on a password-protected website for
classroom use.
Small Businesses as Global
Enterprises

3. economies.
-Global Firms
cross-border business activities in mind
activity—small companies can build upon their
unique resources to become global competitors.
18–4© 2017 Cengage Learning. All Rights Reserved. May not
be copied, scanned, or duplicated, in whole or in part, except
for use as
permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for
classroom use.
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
Where in the World Are Entrepreneurial Companies Doing
Business?18.1

4. © 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
Questions to Consider Before Going Global18.2
Questions Before Going Global
payoff
global?
allocated to international operations,
organizational structure
18–7
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a

5. certain product or service or otherwise on a
password-protected website for classroom use.
Questions Before Going Global
(cont.)
apacity?
operations on local production
payback
18–8
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Before Going Global

6. of globalization.
political forces in foreign markets.
(NAFTA)
design specifications that may vary
from country to country.
18–9
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Expanding into International Markets
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copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a

7. password-protected website for classroom use.
Factors in
Competing
Internationally
Gaining Access
to Resources
Capitalizing on
Special Features
of Location
Cutting
Costs
The Forces Driving Global Businesses
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copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
Gaining Access

8. to Resources
Traditional motivation:
Find raw materials.
EMERGING MOTIVATION:
OBTAIN HUMAN RESOURCES.
Expanding Markets
Traditional motivation: Extend the product life cycle.
EMERGING MOTIVATION:
FIND BUYERS FOR HIGHLY SPECIALIZED PRODUCTS.
Cutting
Costs
Traditional motivation:
Reduce labor and transportation costs.
EMERGING MOTIVATION:
OBTAIN TARIFF REDUCTIONS
Capitalizing on Special Features of Location
Traditional motivation: Profit from unique local features,
EMERGING MOTIVATION:

9. FOLLOW LARGE CLIENT FIRMS THAT LOCATE ABROAD
Expanding into International Markets:
Making the Most of Experience
-unit savings gained from the repeated
production of the same good.
to improved work performance.
the expansion of production.
18–12
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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10. © 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
BRIC Markets18.3
Cutting Costs
International Outsourcing
business operations through contracts
with independent providers.
operations abroad.
18–14
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a

11. password-protected website for classroom use.
Strategy Options for Global Firms
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copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
International
strategic alliances
Importing
Global
Strategy
Options
Locating facilities
abroad
Exporting
International
franchising
Foreign
licensing

12. Strategy Options for Global
Firms
produced in the home
country to customers in another country.
-cost way to expand into international markets
activity.
18–16
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Strategy Options for Global
Firms (cont.)
lenges

13. methods
18–17
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Strategy Options for Global
Firms (cont.)
ing
to buyers in the home country.

14. vendor.
that can provide products or services
a firm needs to operate successfully.
18–18
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Strategy Options for Global Firms
(cont.)
purchase the right to manufacture and sell a
firm’s products in international markets.
—the company buying the licensing rights

15. —the company selling the licensing rights
unit produced under a licensing contract
18–19© 2017 Cengage Learning. All Rights Reserved. May not
be copied, scanned, or duplicated, in whole or in part, except
for use as permitted in a license
distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
Strategy Options for Global Firms
(cont.)
systems, and management services to a
firm in another country.
firm in different countries for the sake of

16. pooling resources and sharing the risks
of an enterprise.
18–20
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Strategy Options for Global
Firms (cont’d)
-border acquisition
of a company located in another country
“from scratch” in another country
18–21

17. © 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Challenges to Global Business
to negatively affect the performance of
businesses operating within.
of the economy changes the business
environment in ways that hinder the
performance of firms operating there.
18–22
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a

18. certain product or service or otherwise on a
password-protected website for classroom use.
Challenges to Global Business
—the value of one country’s currency
relative to that of another country. Variations in
currency values affects the profitability of
international trade deals.
18–23
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.

19. Ease of Doing Business18.4
Assistance for Global
Enterprises
Game: A
Small Business Guide to Exporting
18–25
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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20. Assistance for Global
Enterprises (cont.)
ional
Customers
18–26
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
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18.5 Trade Intermediaries Most Suited for Small Business

21. Financing Assistance for
Global Enterprises
issued by a bank to honor a draft or
other demand for payment when specified
conditions are met.
shipped and the title to that product has been
transferred.
18–28
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.

22. Financing Assistance for
Global Enterprises (cont.)
-your-small-
business-exports-foreign-investments-or-projects.
18–29
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Key Terms
bill of lading
born-global firms
counterfeit activity
cross-border acquisition
economic risk

23. economies of scale
exchange rate
experience curve efficiencies
exporting
foreign licensing
globalization
greenfield venture
importing
international franchising
international outsourcing
international strategic alliance
learning effects
letter of credit
licensee
licensor
offshoring
political risk
royalties

24. trade intermediary
trade mission
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
Small Business
Management, 18e
Longenecker/Petty/Palich/Hoy
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license
distributed with a certain product or service or otherwise on a
password-protected website for classroom use.
Product Development and
Supply Chain Management
Chapter 15
© 2017 Cengage Learning. All Rights Reserved. May not be

25. copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or
service or otherwise on a password-protected website for
classroom use.
Learning Goals:
growth of a small business.
growth.
ntify stages in the product life cycle and
the new product development process.
product.
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copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or
service or otherwise on a password-protected website for
classroom use.

26. Learning Goals (cont.):
alternatives available to small businesses.
product decisions.
management and the major considerations in
structuring a distribution channel.
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or
service or otherwise on a password-protected website for
classroom use.
To Grow or Not to Grow
ain the status
quo is a goal of some entrepreneurs.
stressful for the small firm.

27. growth soaks up cash faster than it can be
generated.
on a small
firm’s personnel.
15–5
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Innovation: A Path to Growth
hand-in-hand.
or services is often not easy.

28. is the goal.
sustain its competitive advantage.
15–6
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Reducing the Risk of Failure
While Innovating
.
or service you are hoping to create.
as adding value to their lives.
n one

29. product or service.
product or service.
15–7
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Achieving Sustainability
-creating position that endures over
time
15–8

30. © 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Achieving Sustainability (cont.)
Cycle
15–9
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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31. use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
The Competitive Advantage Life Cycle15.1
The Product Life Cycle and
New Product Development
a
specific product’s sales and profits over time
be adjusted to the product’s position on the curve.
they lose their commercial potential.
life cycle of a product rises then falls—
innovation is necessary for a firm’s survival.
15–11
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32. part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
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copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
password-protected website for classroom use.
The Product Life Cycle15.2
New Product Development
Process
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use as permitted in a license distributed with a certain product
or service or otherwise on a
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Idea
Accumulation
Business
Analysis

33. New Product
Development
Product
Testing
New Product Development
Process
consideration
-owned patents
ned patents listed by the U.S. Patent Office
15–14

34. © 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
New Product Development
Process (cont’d)
ss Analysis
profitable.
1. Product’s relationship to the existing product line
2. Cost of development and introduction
3. Available personnel and facilities
4. Competition and market acceptance
15–15
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part, except for use as permitted in a license distributed with a

35. certain product or service or otherwise on a
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New Product Development
Process (cont’d)
consumer reaction to the product.
15–16
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Building the Total Product

36. of identifying a product.
(Intangible)
15–17
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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use as permitted in a license distributed with a certain product
or service or otherwise on a
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Components of a Brand Identity15.3

37. Building the Total Product
(cont’d)
1. Select a name that is easy to pronounce and
remember.
2. Choose a descriptive name.
3. Use a name that is eligible for legal protection.
4. Select a name with promotional properties.
5. Select a name that can be used on several
product lines of a similar nature.
15–19
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Building the Total Product

38. (cont’d)
1. Be simple.
2. Design for visibility
3. Leave it open to interpretation.
4. Be relentlessly consistent.
5. Recognize the importance of logo design.
6. Get good advice.
7. Don’t expect miracles.
15–20
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Protecting the Product Offering
k

39. distinguish a manufacturer’s product
exclusive right to use a
brand to identify a service.
15–21
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Building the Total Product
(cont’d)
, design, and protection for the product.
about product features, correct use, and care.

40. 15–22
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Building the Total Product
(cont’d)
• Warranties
orm at a
certain level or meet certain standards.
competitive practices, customer perceptions, legal
implications
15–23
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41. part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Product Strategy
tegy
marketing mix is used to achieve a firm’s
objectives.
—the
individual item
15–24
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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42. Product Strategy (cont.)
mix
15–25
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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© 2017 Cengage Learning. All Rights Reserved. May not be
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use as permitted in a license distributed with a certain product
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43. Product Lines and Product Mix for 180s LLC
Source: Compiled from “180s,” http://www.180s.com, accessed
January 26, 2011.
15.4
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use as permitted in a license distributed with a certain product
or service or otherwise on a
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Services Marketing Versus Goods Marketing15.5
Product Strategy (cont’d)
—a service, a
good, or both—offered to consumers in an
exchange transaction.
product or core service) and
complementary components (features).

44. 15–28
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Product Strategy Options
/multiple
markets
market
markets
market
◦ Multiple products/multiple
markets

45. the targeted market to
become customers
nt
customers to use
more of the product
customers to new
uses for the product
15–29
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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The Legal Environment

46. care and use
15–30
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copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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The Legal Environment (cont’d)

47. demark Protection
use of a registered non-generic name, symbol or
other mark to identify a product or service.
the U.S. Patent and Trademark Office (PTO).
the phrase “Registered in the U.S. Patent and Trademark
Office.”
15–31
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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The Legal Environment (cont’d)

48. Patent Protection
make, use, or sell and invention.
function
15–32
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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The Legal Environment (cont’d)
ction (cont.)
of a product and its inseparable parts

49. and new variety of plant
15–33
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part, except for use as permitted in a license distributed with a
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The Legal Environment (cont’d)
ight
publish, perform, display, or sell his or her works.
tive image (“look”)

50. 15–34
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part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
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Supply Chain Management
which a firm creates or develops a product
or service and delivers it to customers.
intermediary relationships to support such
movement.
15–35
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51. part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Supply Chain Management
(cont’d)
in the
physical relocation of products.
guide the movement of a product.
15–36
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part, except for use as permitted in a license distributed with a
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52. © 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as permitted in a license distributed with a certain product
or service or otherwise on a
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Channels of Distribution15.7
Channels in Supply Chain
Management
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use as permitted in a license distributed with a certain product
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Channels of
Distribution
Direct
Channel
Dual
Distribution
Indirect

53. Channel
Supply Chain Management
(cont’d)
f Intermediaries
15–39
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54. Scope of Physical Distribution
(cont’d)
problem.
warehousing.
15–40
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Scope of Physical Distribution
(cont’d)
Terms
—F.O.B. origin, freight

55. collect.
Selecting the carriers.
15–41
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Scope of Physical Distribution
(cont’d)
-effective
transportation, storage, and distribution services
to small companies.

56. -Party Logistics Firm (3PL)
services to companies that prefer to focus their efforts
on other facets of their business.
15–42
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in
part, except for use as permitted in a license distributed with a
certain product or service or otherwise on a
password-protected website for classroom use.
Key Terms
agents/brokers
brand
brand image
brandmark
brand name
channel of distribution
common carriers

57. contract carriers
copyright
design patent
direct channel
distribution
dual distribution
indirect channel
merchant middlemen
patent
physical distribution (logistics)
plant patent
private carriers
product
product item
product life cycle
product line
product mix
product mix consistency

58. product strategy
service mark
supply chain management
sustainable competitive advantage third-party
logistics firm (3 PLs)
trade dress
trademark
utility patent
warranty
© 2017 Cengage Learning. All Rights Reserved. May not be
copied, scanned, or duplicated, in whole or in part, except for
use as
permitted in a license distributed with a certain product or
service or otherwise on a password-protected website for
classroom use.