Friday, October 19, 2007

Major mistakes companies make when they decide to expand internationally

I want to share my experience having interacted with many business owners who would like to expand internationally and I hope it will help you to avoid mistakes in your business. Here are some classic examples:
1. A company has no idea what exactly it wants to do: just to export a product, open an office in a different country, set up a number of distributors, etc. The objectives change in the process and as a result there is no clear vision of where the company wants to go.

2. If it is the first "international experience" there might be no specific person on staff responsible for this project. The project might be allocated to a marketing manager, business development manager or anyone else who also has his/her own primary responsibilities and has vague idea about international business. As a result the project is stalled each time an important decision has to be made, i.e. there is no structure in place to successfully develop the project.

3. If a company already did a new market entry there might be a belief that any subsequent new market entry will be very easy and each new country will be pretty much the same. It is erroneous to think that the experience in Russia will be the same in Romania or Hungary, for example. The simplistic approach to doing business internationally may cause a lot of troubles based on the lack of understanding another country's culture, business models, values, etc.

4. There is a wrong belief that a lot of valuable information required for the project are available on-line. Indeed there are a lot of sources of information on the Internet but it is important to remember to study not only English language reports but the ones in the local language which sometimes can only be found through a local search engine (not standard Google search) Sometimes the mos valuable insights are the ones that have not been translated into English yet.

As an International Marketing and Business Development consultant I try to help people to avoid these pitfalls, I also always utilize my local knowledge and experience on every project I work. I will keep posting information related to the topics mentioned above and I hope they will be useful to many.


Duzi Guide said...

Do you think it works the opposite way as well? Are there examples of Indian, Russian, or Chinese companies that you know of that have made errors in coming to the U.S. who maintained the same thought process as they did in their home country? Perhaps it would be a topic for a future blog.

Scott Guye said...

I think this is the most important consideration for international business, something that should be taught on the first day of any class and reiterated constantly.

Every 'case study' simply supports the basic principle that a lack of understanding is often the greatest contributor to a failing international business plan. The groupthink that every company should simply enter the international market because 'our competitor is' seems to be a pure recipe for failure in the long run at least.

I'd be curious on your take on an 'all-star cast' of assets to have when going into the international arena. (Again, food for possible future blogging-thought).

Anonymous said...

What are recent examples of companies that have made big mistakes when expanding internationally?