Expanding your company internationally represents both great rewards and risks. Going global can exponentially grow well past the limitations of your domestic market. But one of the greatest challenges to success can lie within the company’s structure and staff. This article is focused on how an international expansion affects the rest of the company and where to focus your planning beyond business development in foreign markets.
Always Start With Strategy
The key to international expansion is ensuring that your plans align with the company’s overall strategy. Here are some questions to ask your leadership team:
1. Does this expansion fit into the VISION we have for where we want the company to be in 5 years? 10 years?
2. Does the expansion into global markets match the company’s IDENTITY to our customers, our industry stakeholders and our employees?
3. Does this expansion fit with our FINANCIAL GOALS and the ultimate EXIT STRATEGY?
4. Is our company’s STRUCTURE organized in a way where domestic customers and new foreign customers can both be served?
Many companies start expanding internationally while continually chafing against a clash with existing strategy or unspoken assumptions about direction. It’s better to halt expansion plans without this strategic alignment. This holds true for organic international growth as well as foreign company acquisition.
Incorporating International Into Existing Functions
It is critical to integrate international activity into the rest of the company. One of the biggest mistakes I repeatedly see in companies is to establish”International” into its own separate department. The problem with this structure is that the rest of the company begins to disassociate from international and decisions are made elsewhere in the company that do not optimize for all world markets and customers. Eventually leadership tends to shut down the International Department for any number of reasons. Shutting down even a successful operation is easier than working through issues with this “foreign entity”.
Here are some ways that international expansion can affect some core business functions:
- Accounting– Different required accounting reports for government, different norms for handling accounts receivable, need for bribery/corruption strategy
- Business Development/Sales – Different customer buying patterns, different negotiating styles & techniques, different compensation structures
- Customer Support– Local dialects and languages, different expected modes to access service information, different ways of expressing emotion
- Finance – Exchange rate fluctuations, repatriating profits, access to financial capital and banking services
- Human Resources– Staffing for language coverage and other international business skills, updating company employee policies to ensure that they apply to international situations, training needs
- Information Technology– Planning information systems to reach new geographic locations (extension of existing systems), evaluate the need for greater integration for efficiencies in serving more markets
- Legal – Understand legal implications of doing business in new countries/locations including intellectual property rights, employment law, commercial registrations & other regulations governing foreign companies
- Logistics/Shipping – International shipping forms & regulations, hiring a good freight forwarder, managing shipping costs & ensuring that those costs are built into pricing
- Marketing– Country laws governing marketing activities, different customer preferences, different communication preferences, different style preferences, translation/localization of materials
- Product Design/R&D– Manufacturing input requirements (materials AND country of origin), metric vs. English measurement, different packaging requirements
- Production– Increased unit production for additional demand, any alterations to products that stop production before product batch can run, inventory storage
- Supply Chain Management – Sourcing any newly required materials, and hopefully discovering better quality or less expensive supplies/materials available in the new geographic markets!
Managing Company Culture and Expectations
Cr0ss-cultural leadership is the area most overlooked and also most likely to derail an international expansion from within the company. All it takes is for one key employee to view serving international customers as a burden and product orders are delayed, shipping costs are inefficient, or marketing copy is left unchecked for localization. Just like any big change in the company, the change must be managed internally with staff. This means communication from leadership about international markets’ role in the company’s plans. It means training for any staff interacting with the new foreign customers. And it means incorporating international success into employees’ performance objectives and expectations.
When I am working with a company client that has this as a risk, I normally recommend inspiring employees with their expanded international role in the company’s success. Change is uncomfortable for most of us, but when we understand the reasons for international expansion and its importance most employees normally play a positive part. Cross-cultural training can be a wise company investment. It also doesn’t hurt to highlight fun parts of the new country’s culture: celebrate holidays like Cinco de Mayo, display country travel posters in common areas, etc.
For more information or ideas about international expansion planning, please contact Becky Park, The International Entrepreneur. Becky works with B2B technology and professional services companies to help them become more competitive in global markets.