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:
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Already been successful in your target country.
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Excellent useful contacts in the business community and government.
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The ability to help expedite any required permits or licenses.
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The ability to advise your Company on the local regulatory, governmental policy and tax environments.
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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.
Understand Culture and Business Practices
Now comes one of the most difficult steps in the process. You must truly listen to the wisdom and insight of your local partners. You are now preparing to work in a foreign environment with a different culture and laws. Regardless of the target country and regardless of how wonderful your business model, sales and marketing programs, administrative processes are in your native country, the way business is done in your target country is different.
Only your trusted partners can teach you those differences and how to adapt to them so that you can be equally successful in this new market. I say that this is one of the most difficult steps because it is easy to dismiss as “crazy” the way things get done in your new country. To you they may seem inefficient, backward or even counter intuitive. However, you chose your partners in large part because of their local knowledge. So listen to them. To be sure, as the CEO, you have to ultimately decide how your business will operate in this market. But make informed decisions based on what you have learned from your local partners.
Go There—Often
Finally, as much as you would like to do otherwise, you simply cannot manage foreign operations solely by remote control or by flying in for the day, getting a briefing from the local staff and then catching the next plane back home. To truly understand how your foreign operations are working, the challenges they are facing and the options for improving the company’s performance, the CEO or a very trusted representative simply must make regular multi-day visits to each foreign operation.
This is necessary for the same reason that the CEO visits his local operations, remote sites and even wanders the hallways of the corporate offices from time to time. To truly understand any of his/her operations, the CEO must be present, inquisitive and listening for opportunities to improve. As an added benefit, visiting your new country of operations over an extended period of time is the only way to gain the trust and respect of your local partners and to create a truly mutually beneficial long-term partnership with them.
So, now you are armed with the information you need to consider to pursue an international expansion strategy for your company, it’s time to get started! The world is waiting for you!
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Contact John at john.compton@newportboardgroup.com
