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	Achieving Global Growth through the Formation of International Strategic Alliances International strategic alliances are a vital component of global growth for companies of all sizes, not just Fortune 500 companies. Successful companies develop a strategy that encompasses a goal, market knowledge, appropriate resources, and execution with right partner. Small to Medium Enterprises (SME) increasingly engage in international exports. According to the International Trade Administration, the number of SME's that export merchandise doubled from 108,026 in 1992 to 215,754 in 2002. Their revenue in 2002 from exported goods rose 54% to $158.5 billion, representing about 30% of total U.S. goods exported. The increase of SMEs' international involvement creates a competitive environment. It is demonstrative of more and more companies vying for the same business. This makes it more difficult to identify unique market opportunities and strategic alliance candidates. If products and services are relatively similar, what is going to differentiate your company from competitors trying to enter a foreign market and gain share? Preparation and timing are key to successfully enter foreign markets. Obviously, one has little to no control over timing. However, companies prepared with a thorough strategic process will have a higher success. Successful companies develop a strategy based on an end-goal, market insight, internal and/or external resources to structure and implement an alliance with the appropriate partner. All companies, regardless of their size, should develop a comprehensive growth strategy. A successful strategy will set simple, consistent, long-term goals. All companies need to have a full understanding of the target market (size, growth, customers, competitors, etc.). Companies should objectively assess available internal resources and needs, plus how outside experts can complement their efforts. A strategy will go nowhere if it is not effectively implemented. The decision-makers of the company all need to be committed to the strategy and the appropriate resources need to be allocated. Market knowledge is an important component of the strategy. Businesses must first verify that their initial target market is the right one. They can do this by establishing market criteria which create a way to compare various markets. From research, they can prioritize the markets and identify commercial and strategic opportunities. The companies also should enhance their understanding of the market barriers (e.g. foreign trade regulations, competitors, etc.). Another important strategy component involves the firm's ability to fully understand their internal resources and needs. The companies need to define their current strengths, weaknesses, opportunities, and threats (SWOT). This helps determine the best way to tailor and implement the strategy: Does the company need market share protection? intellectual property protection? informal or formal commitment? low or high level of commitment? financial support? ownership? sales/marketing control? The outcome will establish the level and type of commitment the company perceives as ideal for itself and its strategic alliance partner. Once the company fully understands their target markets and internal strengths and needs, they must determine what type of strategic partnership would best position them to obtain their goals. The following diagram portrays increasing commitment across various types of strategic partnerships. Small and medium size enterprises tend to approach international expansion strategies in mutually exclusive steps as outlined in this diagram. Larger companies follow these same steps but they tend to undertake multiple strategies simultaneously. To complete the international expansion process, the company must identify and approach the appropriate strategic alliance candidates. Similar to the market research, they need to establish prospect criteria. The companies use the criteria to compare and prioritize the prospects. They then develop an approach to ascertain the top prospects' level of interest and timing. The strategic process expends a significant amount of time and resources; however, it pays off in the long-run by establishing a profitable international presence. Some companies seek outside experts to assist with strategic focus and to offset the burden on internal resources. No matter what choice the company makes regarding resources, they must be committed and focused on their strategic endeavor or it will falter. For more information on this topic, assistance with issues related to international growth or to discuss your current situation feel free to contact Virtual Strategies, Inc. at 202-776-0500. John Dearing CFA Vice President Virtual Strategies, Inc. www.Vsidc.com jdearing@vsidc.com