Starbucks’ experience in Australia is one example of overestimating the value and market differentiation one brings to the table. One rival credited with their ill fortune “down under” was another American coffee favorite: McDonald’s.
5. Not Taking Culture Clashes Seriously
There are many examples at our disposal of companies leaping before they looked and accidentally upsetting members of local populations with insensitive branding, offensive business practices and a general failure to appreciate how different world cultures can be.
Here are some examples of mistakes to avoid and culture-related questions to ask yourself before expanding internationally:
- Do you have the talent required to communicate and market effectively in the native tongue? Badly translated brand messaging alone has caused no end of headaches for global companies. It’s not uncommon for products to launch overseas bearing names that reference bodily functions in the native tongue. There aren’t many convincing excuses for blunders like these.
- Do you have any multi-cultural leadership experience? Some culture clashes can be a bit subtler, like the challenge of reconciling multiple teams of locals who live and work across the world. There are matters involving pacing, deadlines, work ethic, deference to authority and a host of other taboos and subtle cultural differences that have to be respected and navigated for your company to maintain productivity and harmony as it expands its reach.
- Are there traditions or workplace expectations you haven’t accounted for? Managing a local team while you’re overseas yourself is a challenge no matter how much collective talent might be at your disposal. Companies that have struggled with this process overseas report that ratcheting the headcount down in meetings is just one organizational tweak that can bring more participation and greater collaboration to the table in locations that might work a little differently than we do here.
- Does your leadership, pace and working style match well with Hosftede Insights and other bodies of research? They can help you break down the prominent cultural and workplace qualities and expectations in other parts of the world and change your approach to management and leadership, when the situation calls for an adjustment.
Other companies, in anticipation of branching out their operations to distant shores, have organized job swap programs so that different national cultures can learn how their counterparts work in their brother and sister offices across the country.
That way, they can draw a line of best fit between the cultures, hierarchies, roles, productivity and daily expectations in each location. And having these job swaps take place before your new overseas offices open officially is a great way to anticipate and build solutions for possible problems in advance of, so to speak, “going live.”
6. Starting From Scratch
It’s not necessarily a delusion of grandeur to assume you can build a brand-new foreign presence for your company from the ground up. But it’s probably true that you’re making life harder than it needs to be by choosing to undertake this campaign alone. So what are your alternatives? Here’s a brief rundown of how to spool up your foreign presence quickly, with or without starting from nothing:
- Make an acquisition: Some businesses acquire an already successful, already established small or mid-sized business in target region. Companies like these will already have contacts in the regional supply chain. They’ll know names, faces and procedures, and probably have a firm understanding of the accounting and regulatory standards there. An acquisition like this can be your backdoor into a new market and help you establish a presence without being a total newcomer and climbing the steep hill that comes with it.
- Green field investment: This is a type of direct foreign investment (DFI) where companies choose a site and build their presence from the ground up. As mentioned, this can be a tremendous amount of work, but it also oftentimes comes with subsidies and tax incentives from the “host” nation.
- Direct exporting: If it’s important that you retain control over the manufacturing processes, direct exporting can be a popular way to do so. You’ll partner with foreign distributors rather than assembly companies, which gives you a few more degrees of separation and an “easier out” in the future should you need it. This route is not as appealing or lucrative in cases where the currency of the originating country is far stronger than the currency in the targeted country.
- Franchising: Domino’s Pizza began setting the standard for foreign franchising in 1983. The International Franchise Association provides globally relevant advice and resources for any mid-sized or even smaller company considering this route. Franchising can be a good way to address potential culture clash, as you’ll have local leadership teams who know the region better than you do.
Got all that? This is a crash course for sure, but hopefully it’s been a valuable reminder of what to bear in mind as your company readies for its own 2019 overseas expansion.
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