Chapter 9: Overcoming (and Avoiding) Obstacles
At times, it may feel as though the entire process of planning and executing a global expansion is an exercise in overcoming obstacles. In many ways, it is just that. You're going to be in a position where troubleshooting and problem-solving will need to come as naturally as walking to the refrigerator for a glass of water.
In many ways, your entire business career has been leading up to this moment. Building any business requires a substantial amount of obstacle mitigation. The scale is different now, but the principles remain the same. Objectivity, reason, patience, and hard work cannot be substituted. These are the bedrock of any crisis prevention and mitigation.
One common obstacle many owners face when launching into a new country is supply chain related. You will be in unfamiliar territory and may not yet be versed in the infrastructure dynamics of your new market. An inefficient supply chain could be crippling to a new business venture. For this reason, you need to take affirmative measures to ensure the flow of goods and services is uninterrupted in the formative stages of your expanded operation.
For those selling goods, Attest suggests taking on some additional back stock early to make sure you don't run into the dreaded empty-shelf scenario.
"Managing a supply chain that crosses national boundaries can be a real challenge. Factors like imports, exports, shipping, and logistics can be hugely time-consuming and complex. Any delays you experience—and you will experience delays—can have a big knock-on effect," they say. "If a container of your goods fails to show up on time, gets lost, or worse impounded, you could end up with empty shelves or unable to fulfil online orders. This impacts your sales, damages your reputation, and leads to higher operating costs."
A buffer stock contingency can help guarantee that early supply chain issues are quickly mitigated. Even though there will be some extra costs associated with keeping this stock, that expense may be worth the assurance that you will not lose credibility and the confidence of your new customers.
Rodger Flynn, Asia-Pacific regional head of network capabilities at Grant Thornton International, reiterated how important it is for business managers to stay ahead of supply chain risks and be prepared for multiple contingencies.
"Traditionally in the Asia Pacific, where many operations have supply chains in China, any company worth its salt has a China plus one strategy in case of disruption," said Flynn. "In the current US/China trade war, it pays to have multiple supply chains in mind as a contingency."
Grant Thornton also suggests carrying out regular and thorough checks on your supply chain, and separately, to be sure to also account for things like international employees' labour rights and the quality and origin of raw materials. These must meet both domestic and international standards of compliance.
Creating effective marketing campaigns is another area where many companies face challenges when launching in another country. Marketing is critical to the success of a new business no matter where it is launching, so it is imperative to get it right when expanding to a new market. However, the problem many marketers run into is that they fail to appreciate the nuance of their new area of operation.
"Hopefully you've conducted a thorough market study and established that you have a customer base ready and waiting in your new territory. However, that in itself is not enough. You need to understand how to market to your new audience," reads information from Attest.
Every market, and most importantly, every culture has its intricate composition. Very likely, it will be different from the one you are familiar with, and there will be much to learn. It is incumbent upon you, the business owner, to understand the intersection between social life, norms and mores, and commerce in your new market. It might mean the difference between success and failure.
Reads Attest, "You can't simply have your existing campaigns translated—you'll need to speak to them in a way that resonates (and doesn't unintentionally offend). The tone-deafness of brands entering new markets is well documented."
They cite the recent example of Italian company Dolce & Gabbana's advertisement that ran in China depicting a Chinese model trying, and failing, to eat pizza and spaghetti with chopsticks. This was "quickly labelled racist," they noted.
Be sure to be careful of directly translating proper names, too. The Hyundai Kona was rebranded in Portugal as the "Kauai" due to the original name's auditory proximity to a term for female genitalia.
"You can avoid potential embarrassment by conducting customer research and focus groups around your proposed marketing and branding initiatives and seeing how well they are received," they note.
The most successful operations will come from a blend of thorough market research, feedback from local audiences, and bringing the best elements of your current operation with you, notes Attest.
The key to overcoming obstacles is avoiding them in the first place. This is, naturally, easier said than done. It is hard to predict precisely how a new marketing campaign will be received or how local customers are going to respond to your service and your brand. The only thing you can do is to put in the time and come up with a set of contingencies that are achievable, cost-aware, and agile.
So, what do you do when things start to go wrong? After all, it is highly unlikely that a global expansion endeavour will go off without a few hiccups. Berthet offers some food for thought concerning what to do once you finally make a move and things do start to go a little sideways. The first thing you need to do, he says, is buckle down and start digging into data.
"Did your market change this year in the country? Do you need to put more funds into this branch to reach a profitable threshold? Do you need maybe to change your employees? It's important to review your activity annually," he suggests.
Know when adjustments are needed and make them quickly and swiftly. Don’t wait until things start to unravel uncontrollably before taking action. Be agile, be nimble, and be responsive. There are many unknowns associated with expanding into a new market. It is essential that you are continually feeding yourself data.
Also, even when things appear to be going well, be sure to continually audit your successes and your failures and be prepared to act suddenly. Ideally, you will be able to stay ahead of potential problems and avoid significant pitfalls before you reach a crisis level.