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Thursday, Nov 30, 2023

Thinking Globally a Necessity for Most Companies

“The World is Flat,” a recent bestseller by New York Times reporter Thomas Friedman described a new era of globalization in which more and more businesses are peddling their products in international markets with increasing ease and efficacy. Locally, many of the fastest growing private companies in the Valley are finding this theory to be true, as they increasingly rely on international sales to spur their exponential growth. While companies can still survive by selling exclusively domestically, globalization is fast becoming a necessity rather than an option. Agoura Hills-based musical instruments manufacturer, Line 6, Inc. sells its guitars and amps in 66 different countries across the globe. It maintains a European distribution office based in England, where all European sales, marketing and logistics are conducted. From that office, Line 6 is able to sell directly to retailers across Europe. For its non-European product sales, Line 6 relies on distributors in each country. “We’ve been global since the beginning of the company,” Line 6 President and CEO Mike Muench said. “We certainly see the international marketplace as a major expansion opportunity. We follow a product strategy that tries to tailor the product offerings to specific countries we’re in. We also try to keep a strong eye on the global street price of product. We’re always watching out for major discrepancies that might exist between countries. These kinds of things are very transparent and can create problems and leaves customers feeling overcharged, something we always strive to avoid.” Muench also pointed out that another reason why many companies go global is that with firms doing their manufacturing overseas, they already have established bases in emerging markets such as Asia and Eastern Europe. “The manufacturing base of the major players in our industry is global. Many companies use overseas suppliers who they buy product from,” Muench said. “In order to compete you need a price structure similar to your competitors. It makes you think about your sourcing on a global basis. If you’re going to be a significant player globally you have to be there from a supplier’s standpoint.” Small but global It would seem that globalization has become a mainstay of the business plan for almost all manufacturers large and small. One might expect a $60 million-plus a year company like Line 6 to sell its goods internationally, but even Van Nuys-based toy manufacturer Sota Toys, a company that employs just eight people and grossed just $2.3 million last year, has a significant international presence. “Our collectibles sell very well in Europe because they are big fans of horror movies. Japan is also a major market for us,” Jeff Howard, the company’s vice president of business development, said. “It’s the nature of the world. Hollywood invests a great amount of money into having their shows and films being well-known internationally. We have licenses for those shows and can cater to an already existing fan base.” Not only manufacturers are finding ample overseas markets, Agoura Hills-based systems integrator Infospectrum Inc. has also recently begun an international expansion push. The company, which caters to the military, aerospace and telecommunications industries, has started to garner some major overseas clients, including Norcontrol IT, a major Norwegian firm. Additionally, Infospectrum has begun selling its services overseas. “We went global in order to diversify. We didn’t want all of our eggs in one basket,” Suresh Radhakrishnan, the company’s president, said. “We see a lot of potential in Europe and Asia, particularly Singapore, Indonesia, Malaysia. We haven’t been able to penetrate the market there yet but we have products and resources and we think that we can make an impact.” Jack Kyser, the chief economist for the Los Angeles County Economic Development Corporation believes that this trend is here to stay. “Having a global focus is only going to be more and more important in the future,” Kyser said. “You can’t be a small local company and think you can thrive on selling domestically. If you don’t globalize then someone is just going to steal your idea and take it internationally for you.”

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