Tips for Going Global: Plan Before You Expand

27 October 2015 Privacy, Cybersecurity & Technology Law Perspectives Blog
Authors: Shiva K. Sandill

Companies enjoying success in the U.S. often seek global expansion to gain strategic benefits from accessing new markets—new revenue potential, talent acquisition and increased brand awareness. Before replicating your business for a new market and approaching global expansion as a default growth option, the development of a well-constructed business strategy is imperative. International business expansion can present challenges, many unknown. However, there is potentially a great deal of upside if you develop a plan that balances the risk of expansion with benefit of a new market opportunity.

At the 2015 FOLEYTech Summit, Scott Aldsworth, Vice President of Sales of Radius; Luis Barros, Founder and Managing Partner of Leading Business Ventures; and Steve Kozik, Director of Omron Electronics, LLC; shared practical tips for avoiding pitfalls when businesses consider going global.

Find Trusted Local Partners

After management has outlined its objectives for a company’s planned expansion, it’s incumbent upon the company to determine how to enter these new, global markets and consider what resources are available to assist its entry. Consider whether to enter the new market with a partner or not. Are there local trade organizations that can navigate through some of the local bureaucracy? Is forming a joint venture with a local partner, who is familiar with the market a smarter option?

Familiarizing yourself with local laws, standards, and practices that apply to your company may not be enough — many companies establish relationships with partners located in the countries whose market they are seeking to enter. The panelists at FOLEYTech noted that local partners are instrumental in the acquisition of trustworthy and competent employees, and they also provide expertise in negotiating local regulations and customs.

Think Global, Act Local

A common reason why companies fail when expanding internationally is the incompatibility of the native and corporate culture. Understanding and delivering in a relevant, local context is a key component of an effective entry to a foreign market and to customer experience management. Every culture has its own unique set of customs for doing business. As such, companies seeking entry into new markets must embrace practical and business sensitivity to cultural issues, norms and values. Companies should never try to force methods or procedures into the culture of the new location if they are not welcome. Failing to localize properly will not only damage your transition, but also your reputation.

Risks

When considering global expansion, a business must evaluate all factors, positive and negative, that impact its ability to penetrate a new market. To avoid unforeseen barriers to entry, efforts must be made to understand legal/regulatory issues (compliance risks, ownership/structure requirements and local laws); operation risks (logistics, human resources, supply chain and technology); financial risks (tax, foreign/currency exchange, transfer pricing, credit/cash management and payroll issues); and geopolitical economic risks. While compliance with regulations and industry standards will not insulate your company from liability, it will likely mitigate such liability and circumvent unanticipated obstacles.

More and more U.S. companies are moving toward globalization. Given ongoing challenges associated with going global, success in achieving global expansion goals will likely be varied. Going global can be an excellent way to grow your business. Companies that research, identify key issues and create a risk-aware culture will be in a better position to succeed.

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