Congratulations, Mr. CEO!  You have created a successful business and you believe that your company has long term potential.  Since so many companies fail to reach this level, you are to be sincerely congratulated on your success to date.  

Having reached this level of success, you are probably considering which strategies to pursue in order to continue or even enhance the growth of your company.  One of the most obvious and potentially profitable strategies that you could and probably should consider is expanding your business into foreign markets.  Opening operations in foreign markets has tremendous potential for most companies including sales growth, development of new products, improved company image and visibility and even the prospect of having your company’s product or service make a positive impact on the world in which we live.  

However, like any expansion, the CEO must carefully consider and plan for four significant challenges that the company will face in the international environment.  

Target the Right Markets

First, you must understand the local market and culture of your target country.  Just because your product or service is popular and successful in your country does not mean that it will be well received in another country and a different culture.  Do not just take the word of your local contact or the limited anecdotal information that you may have collected so far.  Do your own probing market research to make sure that the target country is a good fit for your products or services. Take a holistic view, including the cost of overseeing and coordinating operations in markets whose legal, regulatory and business characteristics are often very different from your own.  

Choose the Right Partners

Having determined that there is a good market for you in the target country, the most important decision a CEO can make is choosing his/her partners in the target country. This is true whether those partners take the form of joint venture partners, local business partners, local vendors or local advisors.  If chosen properly, your foreign partners can give you insight into the dynamics and direction of the market you are considering entering. This can mean a significant advantage over the competition. It can accelerate your expansion and lead you to those new sales and profits that you are seeking sooner than would normally be possible.   

However, choosing the wrong foreign partner is almost always fatal to your operations in that country.  If not impossible, you will find it extremely difficult, or at least incredibly expensive, to recover from this mistake.  Among the chief characteristics that the CEO must look for in his search for foreign partners are those that must have:  

• Already been successful in your target country.

• Excellent useful contacts in the business community and government.

• The ability to help expedite any required permits or licenses.

• The ability to advise your Company on the local regulatory, governmental policy and tax environments.

• Honesty and integrity.  If you can’t truly trust your foreign partners to look out for the best interests of your Company rather than their own personal interests, you are doomed to fail.

In the second part of this article I will consider the final steps to consider before deciding on an international expansion plan.

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Contact John at john.compton@newportboardgroup.com