Minimizing your execution risk when going offshore

The unfortunate reality of firms attempting to expand internationally is that most fail. Why do only a small few succeed? The answer comes down to taking a proactive approach rather than simply jumping at the first sign of interest in an offshore market.

Of course, there is no magical formula, but in our experience; successful companies understand a few basic factors:

• A key point of difference is required to build value
• Building a substantial coverage in only a few markets will drive greater value than an insignificant coverage in many markets
• International expansion requires thorough planning and forethought
• The balance between capital constraints and the time taken to produce the targeted returns in each market

Our experience tells us that the risks and downsides associated with poor execution can be mitigated by understanding, from the very beginning, the markets and customers to target. Our view is that companies have limited resources and to produce the greatest possible outcomes can only be delivered by focusing on understanding:

• Where the company’s strengths truly lie and how that can be used to differentiate its offer from that of its local competitors. This sounds like a motherhood and apple-pie statement, but understanding what the company is good at and how that will drive value in a foreign market demands the company both understands the foreign market and also considers in which areas it needs support and assistance
• Which countries to enter. Careful and considered country selection is an absolute must. If companies don’t get this basic element right, they risk huge sums of money at massive opportunity cost. The best strategy is to select a few markets carefully, enter one, build value and then move on. A piecemeal approach spells disaster.
• Who will make a great partner? In the international market place, partnerships are generally for the long term – not a short fling. It’s like getting married rather than just dating for while. Select your partner carefully and make sure they have complementary skill sets and knowledge.

Expanding internationally almost certainly means you will be faced with a myriad of decisions and choices – careful selection of markets, customer segments, product offers, partners and partnering arrangements can mean the difference between success and failure.

DC Strategy is your business growth specialist. For more information on taking your business offshore please contact:

Anthony Richardson
General Manager – DCS International
anthony.richardson@dcstrategy.com
03 8615 7254