Expanding a business is always a big decision. Risks are high, but potential for increased payoff usually lies at the heart of the expansion. But unlike spreading out your business within the country, going international requires special attention to political, cultural, and economic factors. Opening a branch in Latin America, for example, is much different than opening one in Asia. Blanket strategies don’t work when it comes to doing business globally. Every new country or region demands specific, tailor-made marketing and business plans, and there are a few essential questions to answer before following through.
What are the political conditions in the region?
The legality of your operations overseas is perhaps the most important factor to look at, after all, legal trouble is the last thing a growing business needs. Not only is it a good idea to look into how other businesses in your industry function there, but researching any trouble they may have run into can be immensely helpful. Learning from others’ mistakes can give you an advantage your competitors may have missed out on.
Laws change, of course. Look into what issues the region is facing and what legislation is being worked on before committing to an expansion there. In the current age economic, social, and environmental issues are hot topics across the globe. Consider what is happening in the countries and organizations your target country interacts with economically, as trade agreements, tariffs, and alliances can be tricky as well. Have some foresight and set up your business to remain safe and lawful in the coming years.
What is the economic climate of the region?
Economic factors are likely what drew you to a particular region from the beginning, but what looks good on the surface may not reflect the overall economic state. Is there large economic disparity? How fierce will competition be? What resources are available in the region? Investigating factors such as a country’s economic history, GDP, and emerging industries will be a pivotal part of creating an effective strategy to ensure your company’s success. How will these help you? How might they harm you?
Depending on your organization’s focus other aspects may be deciding factors as well. For retail, ensure that there is customer base that you can rely to shop with you. For manufacturing, wages and availability of materials will make or break your business. What are the costs of manufacturing there? Are other companies interested in manufacturing there, or are they relocating? The recent trend of moving manufacturing back to the U.S. from China, for example, would be a revealing piece of information that prevent a foolish business decision.
Is the expansion ethical?
Business ethics are, sadly, often overlooked, especially during periods of growth. Frankly, this is unacceptable. If the expansion can’t be done in a non-exploitative way, don’t do it. As Rajshree Agarwal of the University of Maryland explained in The Washington Post, “Ethical business is based on voluntary trade.” If the business deal is not mutually beneficial with region you’re looking into, consider reevaluating your plan. What can you offer the local economy? Jobs with fair wages? A service that was previously absent? Opportunities for local businesses?
Do work you can be proud of. Business that you wouldn’t want shared with the public is most likely business you shouldn’t be conducting. It’s easy. While pursuing your company’s aspirations, just do the right thing.
If you can confidently answer all of the questions above, you may be ready to take the next step in your expansion. The infographic below provides some illustrated data on global expansions if you are unsure or in search of more information.
(Images by Rutgers University)