Page 208 - Marketing the Basics 2nd

200 Marketing: the Basics
Most firms can always grow but the cost of achieving an additional 1 per cent of market share may be prohibitive. Another big reason to compete elsewhere is from a view of better understanding your key foreign competitors so that you can better compete against them in your home market, which for many firms tends to remain the dominant market for many decades. Some big multinationals firms like Nokia, Hitachi and BMW are no longer dominated by their home markets and become even more international in their outlook over time. But in this case we are thinking about the smaller firm just starting out, so other reasons might include needing a larger customer base to achieve economies of scale, wanting to diversify your risk which comes from being too dependent on one market, and customers going abroad and wanting you to service them there.
Once you have decided that you should seriously consider foreign markets the next question is, which foreign market do you start with? For firms in some countries the choices are fairly obvious. For a Canadian firm the US is the natural place to go. For Mexican firms the US as well. This is due not only to the physical closeness but also economic treaties and what is called psychic or cultural proximity. Not only do the US and Canada share borders but they are also culturally quite similar. When most Canadians travel in the US they are assumed to be fellow Americans by Americans. We tend to feel more comfortable in culturally similar countries but, more importantly, we tend to be more successful marketing to cultures that we naturally seem to understand. In Europe it is not quite as obvious where you should first go. Take for example, the Netherlands, the Dutch are quite flexible, because of their history, culture and language skills. The Dutch tend to be able to export to Germans, French, Belgians, Danes and Britons with equal ease. Part of this ease is the reality that there are only a little over 16 million Dutch people. At a certain point in your success as a Dutch firm you run out of Dutch people. Then you naturally turn to your neighbours for growth. This helps explain why Nokia, the Finland- based mobile phone maker, had to naturally start exporting early in their history – there are fewer Finns, about five million.
This naturally raises the question, why do we care about growth? In some firms, where the owner is getting on in years and may not care, they are just waiting it out till retirement and enjoying the