More than 300,000 American companies are currently successfully competing to world markets. So for all the recent uproar from the media, the horses have left the bar–it’s a world economy–regarding taxes, protectionism, populism etc.
If your business has just started to grow overseas or you are an established company which is transforming into a true global organization, here are a couple of key things which should take into account when taking next steps:
1. Don’t forget your friends
The propensity to rise internationally is to hunt down huge markets in far-off countries. The news is full of reports regarding burgeoning middle classes in countries like India, Brazil and Indonesia (including China and Russia in the BRICI counties).
You’re constantly hearing it, “We’re company when we get X percent (small) of a YMM individual (grand) sector!but the US exports data show a completely different panorama…
Less than one quarter of all shipments to Mexico and Canada go to the United States. With China and an existing trading partner, this is more than 50%. Half of all sales to three nations.
Every industry is obviously distinct and success stories exist, but Mexico and Canada’s natural trading partners are the combination of local proximity, free business, logistical support, cultural familiarity, etc.
While these markets may not be right for your offering, you will not be attracted by the road less traveled in the early days of your strategic plan in the hope to find a gold pot at the end of the rainbow.
2. Place yourself under cover
In threat words, trade overseas carries with it different challenges that US companies simply do not encounter domestically. In addition, this goes without saying.
This is not supposed to deter you from rising worldwide, but it ensures that you, your staff and your company must be covered with extra effort. For general, three main risk areas include:
- IP -Regulatory oversight varies drastically from nation to nation, so make sure you understand what you have to do to defend yourself in each new market. Our advice here is that although at this point a certain business in overseas is “maybe” it is worth investing at an early stage in the proper protection.
- Contractual – If you formalize a contract in a foreign country with a manufacturer, contractor, seller, or another business, make sure you understand the local law and make agreements. For instance, most countries provide protections for suppliers and staff that circumvent the contractual language. Prevent complications or consult community lawyers.
- FCPA – No joke about the Foreign Corrupt Practices Act. Also employees of your business (e.g. licensed distributors ‘ representatives) can get you in trouble for breaching FCPA laws overseas. Every globally involved business is subject to FCPA enforcement and it is not a defense to claim ignorance. Make an effort to understand FCPA and how to defend yourself.
3. Concentrate, Concentrate, Concentrate (by a guard)
Even for established companies, emphasis is critical to success on international markets. They often see the “world” as a monolithic, one-time market, but of course, the fact is that each country has a uniquely different collection of rivals, network structures, social complexities, legal laws, etc.
All that said, if you don’t settle on a very small number of countries with your long-term global policy, you have to consider both wide and deep. You clearly can not be everything for everyone and at the same time build a sustainable international business. To context, this means:
- Ensure the brand changes are sufficiently large to mitigate costs of investment
- Establish a legal structure that covers forays but can broaden with the growth of the company.
- Identify international distributors that can satisfy short and long-term criteria
4. Conservatively budget
The obstacles you face on your domestic market are compounded by a host of factors when you expand globally, like space, culture, legal systems, cultural norms, politics–just to name a few.
It is therefore important to pursue the global project with a realistic view of what it will do to reach key business goals, or you risk running out of money, energy, funding, group excitement, or a number of other vital inputs before strategies are executed.
Here is a simple rule: double the time line and triple it! The projection must be halved. If it’s possible to live with the results, steam ahead!
5. Put the necessary plans into place
All company functions will be impacted by transfer to international markets. What are the words for consumers from abroad? Are we going to sell in US dollars or local money? How are they going to manage wages? What are the specifications for local packaging? The list is almost infinite, and no position is immune to the effects of international expansion.
Whether you are already preparing or doing business abroad, but are trying to get your company to the next stage, it is important for the whole enterprise to prepare consistently and get in.
Here’s no short cuts. Make international development a focus and create a process to ensure that each role recognizes the consequences on its expertise and obligation, looks objectively at the holes and sets out a timetable and timeline for the resolution of the gaps.
Only as strong as the lowest link inside the company would the international business be.