For businesses
looking for new sources of growth, especially when domestic markets are
cooling, the temptation to look overseas is strong. And in fact expanding
globally can be a major new source of revenue. But even those organizations
that succeed overseas typically do so only after surviving a number of initial
costly mistakes, and many never recover from them. Any leader can add the line,
“Expand internationally” to his or her company's strategic plan. Converting
that intention to profit is an entirely different matter.
1) Chasing
hot markets. In spite of the world allegedly being flat, its many
economies do not all move in lockstep, and some areas may grow faster than
others. Experts fall over themselves to explain why that growth will continue.
But be wary of these predictions—witness the sudden and unexpected cooling off
in many formerly red-hot emerging markets over the past year. If your overseas
growth plans depend on certain economies continuing to boom, you could be in
serious trouble if and when the boom fizzles.
2) Misjudging
risk. Doing business in other countries isn't inherently
riskier—unless you fail to do your homework in understanding the real risks,
and recognize that they can be quite different from those you're used to. If
you've only been doing business in the United States, for example, you may be
clueless about the risks associated with unstable governments, corruption,
sudden shifts in regulation, erratic investment markets, and much more. In many
cases these sorts of risk can be safely managed—but only if you know about
them.
3) Cloning
your business approach. Exactly what sort of business strategy and
tactics will work for you in an overseas market is highly case dependent. But I
can tell you right now what approach definitely won't work: Whatever it is
you've been doing in your home territory. Everything is different in other
countries—customers, competitors, the regulatory environment, logistics, even
accounting practices. Go in with your eyes wide open to the fact that you'll
need to figure out these differences and adjust your strategies, tactics and
processes accordingly.
4) Overestimating
the availability of infrastructure and personnel. You probably won't
appreciate all the resources you have access to in your home territory until
you set up operations overseas and realize they're absent. Infrastructure can
be relatively lacking in any number of areas, including transportation,
financing, health care and the law. But the one that's most likely to bite you
is an absence of skilled, experienced personnel in your particular business.
You can import your own people, but good luck with that—many home employees
won't want to make the switch for long or at all. You'll need a plan for recruiting
and training overseas.
5) Being
insensitive to culture. As obvious an error as it may sound, business
leaders typically fail to adequately appreciate just how important it is to
learn about what people in other cultures consider respectful, and what offends
them. In the United States, having the right product or service at the right
price usually trumps all. Not so in other countries, where you can kill deals
by, depending on the region, bringing up business too quickly, handling a
business card too casually, crossing your legs the wrong way, shaking someone's
hand, or politely refusing a second drink. That sort of sensitivity has to be
developed and applied to everything your company does. (And yes, everyone
speaks English everywhere today, but a few hours spent learning a handful of
poorly pronounced phrases in your host's language is usually considered a nice
gesture.)
6) Intolerance
of ambiguity and uncertainty. There is no way you'll be able to march
into another country and set up shop without encountering all sorts of
confusing and unpredictable situations. You're simply not going to understand a
lot of what's going on around you, or be able to know what the consequences of
all your decisions will be. Some leaders are so used to being on familiar, controllable
territory that they find the ambiguity disorienting to the point of defeat. But
if you accept those limitations going in, and are prepared to work through
them, you'll probably do fine. All of the mysteries of doing business overseas
are solvable with time and effort. But there are no shortcuts, so don't bet
your success overseas on finding them.
