Marketing Articles

Financial Professionals Making the Most of International Markets

In recent years, globalization has been at the forefront of business discussions, and not as a mere coffee table conversation piece. Rather, financial professionals and executives are expressing genuine concerns as to how their companies will be able to effectively compete on an international level with others that have a wider range of available resources. It turns out, building a global presence does not depend on having excessive amounts of financial support, but rather, it depends on a creative application of available resources. And this is where the expertise and decision-making abilities of CFOs and financial executives come into play.

Corporations, under pressure to cut costs, continue to explore outsourcing options all over the world, with the highest concentration of production shops in China and India. While these options benefit U.S. companies in their abilities to mass-produce products with a relatively low amount of expenditures, what many corporations fail to recognize is that nations that once strictly produced products to be sold in the U.S. are now learning to produce for themselves. That is, outsourcing agents in China, India, and Eastern Europe are emerging as threatening competitors to U.S. organizations because of their ability to produce products inexpensively and develop creative production methods and business approaches.

So what are corporations doing to combat new competition on the international spectrum? While many companies believe the answer to globalization is an increased budget for R&D, it may be more profitable to simply get creative. Think about it—outsourcing shops in foreign countries are learning that they can take the production processes for U.S. companies and build their own products, catered to the needs of the individuals in their countries. The solution to increased international competition for U.S. companies lies in their ability to take existing production processes and do some tweaking themselves; in other words, they too can tailor products to international markets in countries to which they are already outsourcing production. This strategy views countries like China and India as potential target markets as opposed to merely cost-cutting, back-end support structures.

Generating international appeal customized to particular nations provides financial executives and CFOs with an opportunity to support marketing initiatives by making decisions in regards to which markets are profitable to pursue and how to balance risk-and-reward tradeoffs. Simply put, finance professionals should consider such endeavors as if they were a portfolio, for a company may not want to invest all of its resources in one nation, but instead should consider new institutions in a variety of locations. Executives can suggest the best distribution of risk to attain the greatest reward.

As international competition continues to increase, the ability to creatively apply old business practices in new ways will be essential in the development of a company’s global identity. While some of the planning behind these new endeavors relies heavily on marketing and R&D departments, financial executives provide the means to turn these ideas into action. Strong decision-making coupled with a thorough cost-benefit analysis of each potential market are unique talents that CFOs bring to the table to enable their organization to be strong international competitors.