Before an organization embarks on a new initiative in international trade, it is important to assess the organization’s current conditions, attitudes and resources. The assessment needs to be made at all levels within the organization.

This first step is critical in the decision-making process and helps determine if the initiative is feasible, and if the potential gains and opportunities are worth the risk.

Part of assessing your organization’s readiness to expand into new markets is being proactive in identifying the downstream effects of launching a new initiative. Organizations need first to determine whether the initiative will affect the entire organization or only specific departments or groups.

Looking to determine if your new trade opportunities are viable? Check out the FITTskills Feasibility of International Trade online course!

If the change is small in scope and particular to a specific product line that is managed and operated as its own department in the current operation, the effect of the new initiative may be limited to that department and the senior management who will oversee the initiative.

However, if the initiative involves all of the products or services provided by the organization, it’s likely that every individual working for the organization will be impacted by the change in some way. Asking who in the organization will be impacted by the initiative should it move forward is crucial to adequately prepare and plan. For instance, if a department could be overwhelmed by the new customer demands, it may require additional human resources. This potential need must be accommodated in any planning the organization does before launching the initiative.

In addition to defining the impact internally, organizations should assess the impact the new initiative may have externally, such as on customers, clients, suppliers and partners.

Questions to ask include:

• Who are we currently doing business with that may be impacted by this initiative?
• Is it possible that resources will be shifted in such a way that existing customers/clients will be underserved?
• Will suppliers be able to keep up with the demand?
• Are business partners also willing and able to make the adaptations necessary to take on this change?

Addressing the gaps

If, after analyzing all of the factors above, an organization decides it needs to address some gaps before moving forward, it does not mean your plans for expansion can never move ahead.

Instead, a variety of avenues may fulfill the needs identified in the situational analysis. Depending on the particular gap, internal or external resources might be used to prepare the organization for the change it will undergo. If the gap identified is in the area of:

• Capacity of human resources: The organization may develop a plan to train existing employees and hire new staff.
• Cultural competency: The organization may develop and execute a training plan to improve its employees’ abilities to work with different cultures.
• Access to financial resources: The organization may approach governmental and non-governmental institutions and agencies to secure assistance, such as loans and insurance.
• Logistics resources: The organization may need to research and secure arrangements with third party suppliers such as freight forwarders or customs brokers.

Many organizations choose to access and/or hire third-party experts to help them prepare for new international ventures. Once an internal gap has been identified, experts in areas such as finance or cultural awareness can help ensure that the information organizations obtain is current and reflects good business practices.

A variety of programs and services address these needs. These include governmental agencies and their experts (such as export development agencies and trade commissioners), industry associations and their representatives, and third-party providers (such as training organizations, customs brokers and freight forwarders).

Many countries produce guides that list government programs and services available, such as the Exports Program Guide produced for American organizations by the U.S. Department of Commerce and International Trade Administration. Organizations looking to be proactive and adequately prepare for new international trade ventures should research and access the programs and services available in their region.

The post Quick Read: Unsure if you’re ready to go global? Start by identifying gaps appeared first on Trade Ready.

In a highly competitive economy, no company can afford to be operating below its potential. This goal of gap analysis is to identify the difference between the way in which a company’s inputs and resources are currently allocated, and the optimal allocation of those inputs and resources. In doing so, gap analysis can provide insight into areas where there is room for improvement.

Gap analysis naturally flows from benchmarking. Once a company understands the level of performance that is general in its industry, it can compare that to its own performance. Such analysis can be applied to the internal organization (and the deployment of human resources), business direction (strategy), internal processes, and the use of technology (especially information technology).

Through gap analysis, a company can determine what additional investment of time, money and human resources it needs to make to achieve a particular outcome.

To take an example, if a company notices through benchmarking that most of the companies in the industry are now using EDI, it can use systematic gap analysis to determine what it would take to move its own operations from a paper based to and electronic format.

Gap analysis is useful in new product development. A company with established products may find that consumer needs and preferences are changing. As the gap between consumer expectations and the company’s products opens up, the company can use gap analysis to help in the development process.

It can cost what it would take to bridge the gap between existing and new product features, determine the gap between existing sales and expanded sales of the redesigned offering, and test the gaps between current profitability and potential profitability of the new products.

In terms of gap analysis as a planning tool, there are four areas in particular where it is applied.

Usage gap

This is the gap between the total potential in a market and the actual current usage by the consumers in that market. It is difficult to estimate total market potential, including all segments covered by all competitive brands. It is usually done by determining maximum potential individual usage, and extrapolating this by the maximum number of potential consumers, though this depends to a larger degree on judgment rather than strict scientific analysis.

The maximum number of consumers available will usually be determined by market research, but it may sometimes be calculated from demographic data or government statistics. The maximum potential individual usage, or at least the maximum attainable average usage, can be derived from market research. The existing usage by consumers can be derived from panel-based market research such as that undertaken by The Nielsen Company (formerly A.C. Nielsen).

Most marketers accept the ‘existing’ market size, projected over the timescale of their forecast, as the boundary for their expansion plans. Although this is often the most realistic assumption, it may sometimes impose an unnecessary limit. For example, the original market for computers or video-recorders was limited to the professional users who could afford the high initial prices involved. It was only after some time that the technology evolved sufficiently to penetrate the mass market.

The usage gap is critical for brand leaders who may already hold a significant share of the existing market. Their best strategy is to expand the size of the total market rather than to try to get a few more points in the existing market. Smaller players, however, will generally be limited to finding profitable niches where they can extend their offerings.

Product gap

The product gap represents that part of the market that a company is excluded from because of the characteristics of its existing products or services. This may be because the market is segmented and the organization does not have offerings in some segments, or it may be because the positioning of its offering effectively excludes it from addressing some potential consumers because others are doing a better job of serving them.

Some segmentation may be the result of deliberate choice on the part of a company that has set priorities for what it wants to focus on. In other cases, it has come about by default and the product gap analysis can be used to improve its positioning in the market.

Competitive gap

There is also a gap resulting from the competitive performance. This competitive gap is represented by the difference between the company’s performance and the share of business achieved by similar products, sold in the same market segment, and with similar distribution patterns. The competitive gap represents the effects of factors such as price and promotion.

Market gaps

There is another perspective that takes the ”product gap“ to its logical conclusion by looking for gaps in the “market.” These are basically market segments that have not been identified or are not served by anyone. Identifying such gaps may open up entirely new opportunities for product and service development, regardless of what a company is currently doing.

The post Want to find new ways to improve your business? Try using gap analysis appeared first on Trade Ready.