If the next logical step for your company’s growth is international expansion, learning everything you can from those who’ve done it before is probably at the top of your to-do list. We met with senior executives from 11 global original equipment manufacturers (OEMs) to discuss the challenges they faced initially. Here are the top five takeaways.
1. Culture and Communication
When your company is ready to expand, it may be easy to think that expanding internationally can be done the same way you expanded domestically, but that’s not necessarily true. All the executives we talked to agreed that what works in one country may not (and probably won’t) work well in another. To be successful, you need to identify, understand and take advantage of cultural differences in your target markets.
“Push, fix, change, hire, buy, do what you need to do to make the quarter. That’s the business culture I grew up in, but I learned quickly that it’s not how people everywhere approach a situation. If you don’t understand how they get things done, you won’t get them done.”
Respecting others’ working norms is essential, and that includes conversation etiquette.
“I'm not comfortable with silence in a conversation. Those moments of silence are important, though, because in many cultures they indicate thoughtfulness. My tendency was to jump in to fill it, but I ended up cutting off the thought process and collaboration altogether – that impatience was completely counter-productive. Silence can also be used to control the conversation, which is good to know when you’re negotiating.”
Problem-solving style is also incredibly important.
“In some places the approach to solving a challenge is ‘try, try, try, perfect.’ In others, it’s ‘think, think, think, perfect.’ If you’re used to one approach, finding yourself immersed in the other can be enlightening… or frustrating. Just know that at the end of the day, there are different ways to get to the right answer.”
2. Scalability and Adaptability
All great customer experiences have a lot in common. Companies need the right services at the right time to support the demands of their business. They want consistency and predictability – no surprises, and no excuses. When you’re expanding internationally, that requires scalability (systems, processes) and adaptability (accommodating different taxes, currencies, customs regulations, etc.). The more countries you enter, the more complexity increases – and it can become difficult to know what to focus on first.
“Our customers are demanding global capabilities—at minimum regional capabilities—but you have to begin at the country level. Expansion means a focus on their systems and processes, not yours. It’s your job to knit together the pieces of this intricate quilt.”
The nuances of local customs, languages and business norms can pose a significant challenge to those responsible for expanding into new countries. You may need to be prepared to launch the business, then hand it over to local leaders to run it long-term – which makes identifying and preparing that talent critical.
“Local leaders understand their markets, know how to work with their customers and can effectively motivate their employees. They also open you to a 24/7 business cycle rather than command-and-control tied to your headquarters’ time zone. Companies that transition to local leaders quickly are, quite often, more successful. You put in place people with a diversity of experience and opinions and you’re stronger as a result.”
4. Laws and Regulations
International expansion is inherently risky. Every country has its own laws and regulations to navigate, and pleading ignorance is no hedge against penalties for non-compliance. For instance, those doing business in the European Union have to be hyper-aware of the new EU General Data Protection Regulation (GDPR), which applies to all companies processing the personal data of their citizens. The Canada Anti-Spam Law (CASL) requires that a company receive prior consent from anyone it sends commercial emails and texts (think about what that means for marketing). Contracts law, import/export regulations, taxes, labor requirements, conflict minerals – the list is endless. Good legal counsel is essential.
“We understand our own regulatory environment so it’s easy to think ‘okay, it’s going to be that simple.’ It’s never simple.”
Perhaps the best advice I heard on strategy had to do with getting started.
“It's different instincts, it's different DNA, it's different reactions, it's different ways to communicate. Listen first, learn everything you can, collaborate on a solution, then act. ‘Ready, fire, aim’ is a sure-fire way to fail.”
Here are some key questions you should consider as you’re putting together your international expansion strategy:
- Countries – Which countries do you plan to focus on, and what are the implications when making investments in those countries?
- Financials – What are your financial objectives? What are the projected anticipated returns when taking into consideration taxes and other localized expenses, which may vary significantly?
- Products and services – Which products and services will you be taking to these new markets first? Next? How do you plan to introduce, market and manage them? What are your expectations for market share?
- Selling approach – Will you go to market with your own salesforce? A selling channel? Partnerships? Will you be hiring people? Acquiring local sales organizations? What are the labor implications?
- Management – What will be managed locally? Regionally? From corporate headquarters?
No two companies are the same. Each has its own objectives and expectations, and there is no right or wrong strategy for international expansion. One thing we can all agree on is that it’s complex – knowing what you don’t know is essential, and learning from others who have done it before can make the effort a whole lot easier. Have you had similar experiences? How about other takeaways? Tell us about your journey in the comments section. You can also read about my own experience opening and working in new markets here.
About the Author
Doug Halbert is the vice president and general manager of Supply Chain Management and Integration Services for Tech Data. He's responsible for the development and profitable growth of customer solutions that include high-volume labeling and configuration services, complex converged and hyperconverged integrated solutions, and industry-leading supply chain management services which range from 3PL to fulfillment solutions.