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International Business Expanding abroad is a necessity for Canadian companies that want to survive

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Executive Pulse seeks input from Canadian leaders on vital issues that affect our economy and business climate.

Ahead of next month's federal election, Canadians have left little doubt as to the importance they place on Canada's place in the global economy. A poll Monday from the Angus Reid Institute has Canadians putting trade above both foreign aid and military action, with "building better trade ties with international partners" listed as the top choice among those who identify as supporters of the three major parties.

But while it would seem like a sensible move for Canadian companies with one eye on growth to look overseas to continue that evolution, for some business experts, international business is not just a sensible move, it's an essential one.

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"It's not just any company with aspirations to grow, it's any company with aspirations to survive," says Saul Klein, dean of the Peter B. Gustavson School of Business at the University of Victoria. "Operating in an international context is an imperative for any business."

Dr. Klein naturally cautions those looking abroad to get it right before seeking entry into a new market and to put the time into planning in order to understand fully the complexities of a new environment, new rules and regulations and new customs and culture.

He suggests three major steps Canadian companies looking abroad should take. The first is to look at the ingredients that are underpinning their success domestically. Second, understand the competitive market, identify competitors and what kind of value they bring and benchmark their own performance relative to those. And third, figure out the route to market, learn the distribution channels and the ways that companies actually connect with their customers in the foreign market and don't simply assume that it must be the same as what works in Canada.

"If there's one overwhelming factor in what really counts for the difference between success domestically and internationally, it is an understanding of cultural complexity and differences," Dr. Klein says.

As the president and majority owner of Yukon air service provider Alkan Air, Wendy Tayler is rapidly learning the intricacies of building a business beyond Canadian borders. Though the Whitehorse-based company has served Alaska, in particular providing air ambulance services to elderly patients on cruise ships, it recently started to venture further afield.

Ms. Tayler says she has recently quoted air ambulance services to Costa Rica, with expansion into Central America, the United States and Greenland being top of mind for Air Alkan's growth.

"I think we all recognize that there are a limited amount of growth opportunities within Canada so anybody who's trying to grow and expand has to look outside of our borders," she says.

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While acknowledging that learning the flight regulations in foreign countries is one challenge her business faces internationally, her company has the advantage of being in a niche market.

"You need to be offering a service which is hard to find, that is hard to replicate, so that you can differentiate yourself, because quite often we're not necessarily going to be competitive on price," she says. "I think Canadians are very good at that."

Ms. Tayler uses her company as an example, where the medevac services – which make up 40 to 50 per cent of Alkan Air's business – are provided by a Canadian partner, and collectively the two capitalize on the niche that they have formed to be competitive.

She also believes in hiring local where possible, saying that if companies want to be successful abroad, they have to engage the community and reinvest in the places where they are operating.

Dr. Klein has a suggestion for how to hire someone with both local knowledge of the foreign target location and a sense of Canadian values and business practices.

"You need someone who can essentially play that bridging role between your organization and the foreign country," he says. To do that, he suggests taking advantage of Canada's ability to recruit international students, selectively hiring people who come from a particular country. Then, not only have they been educated in Canada, but they can work here for a year or two before being used to spearhead an entry into a particular foreign market.

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While Dr. Klein would like to see Canada's governments do a little more to help small to medium-sized businesses thrive overseas, he understands the reticence of Canadian Trade Commissioner Service.

"It's a bit of a Catch 22," he says. "At the really early market investigation stages where companies need the most help, the trade commissioners don't really want to deal with them because there's just too much that they don't know." He adds that success rates at that early stage can be low, so trade commissioners would prefer to work with organizations that have already done some homework.

And while both Ms. Tayler and Dr. Klein acknowledge that the current lower value of the Canadian dollar helps when doing business abroad, they urge caution.

"You never want to be in the position where you're dependent on low price, but as a way to enter a market and build a position, you want to do it when your currency is weaker, rather than stronger," Dr. Klein says.

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