 |
| 7 Biggest Mistakes Companies Make When Going Global |
|
Here are the 7 most common mistakes that my middle-market clients are making at the beginning of our engagement, when thinking of going global, and by the time we're through, they've learned how to avoid them and enjoy success. Mistake #1: Underestimating the Time Horizon for Your Product/Services Don’t put your plans at risk by budgeting for too short a time horizon. One of the most unpleasant risks is running out of money, after so much work and time have been invested. Be prepared for business to take much longer than you anticipate. There is no set time one can predict and on plan on for things to happen. Unless you build the necessary relationships, it can take a long time to establish the right network and channels of distribution. Mistake #2: Not Having Clear Objectives and a Roadmap Don’t skip this critical step – you can significantly increase your chances of success by starting with researching the market and the competition, setting clear objectives, timelines, milestones and metrics. Make sure you define and target the right market(s) for your product/service, and not only follow the crowds. Also, choose the appropriate mode for entering a particular foreign country and/or region. Not having a good roadmap can turn out to be very costly for your company. Mistake #3: Improperly Judging Risk Understanding your exposure to risk – as well as time horizon and objectives – will help you better plan for success and make better strategic decisions. When conducting transactions across borders, an international business must deal with government restrictions, and find ways to work within the limits imposed by specific governmental interventions in the international trade and investment system. Mistake #4: Confusing Sales with Long Term Business Development How you enter a market and generate your first sales can have a profound implication on just how successful you will be in the long run. Mistake #5: Forgetting the Fundamental Importance of Cultural Differences There is no one way of doing business, and the American way is definitely not the only way. When venturing globally, one has to be sensitive to nuances in order to get the deal done. Many business transactions were halted or terminated due to cultural misunderstandings, or to be a bit blunt, cultural ignorance. Managers in an international business environment must not only be sensitive to cultural and language differences, but they must also adopt the appropriate policies and strategies for coping with them. Mistake #6: Making Decisions Based Only on Widely Known Information One size does not fit all. One has to follow a strategy that fits their product/service, business objectives and corporate culture and then match it with the appropriate country and/or region. Differences among countries require that an international business vary its practices by country. Marketing a product in Venezuela may require a different approach from marketing the produce in Switzerland; managing US workers might require different skills than managing Egyptian workers. Maintaining close relations with a particular level of government may be very important in Mexico and irrelevant in the UK. If you disregard one component of this important triangle, you are sure to dramatically increase your chances for failure. Mistake #7: Being Overconfident in Your Global Expansion Skills Seek professional advice to navigate the unknown and use other people’s experience to help you succeed and follow a smooth road. A little humility goes a long way in combating the overconfidence error. Remember that what got you to be successful in the US, in most cases won’t get you there. At the most fundamental level, the differences arise from the simple fact that countries are different. Countries differ in their cultures, political systems, economic systems, legal systems, and levels of economic development. Many of these differences are very profound and enduring. |