Dr. Harsha de Silva - Sunday Leader (subscription)

Sunday Leader (subscription)

Dr. Harsha de Silva Sunday Leader (subscription), Sri Lanka - Apr 12, 2008 The weak US dollar and strong Asian and European economies are boosting US exports and outbound travel. US carriers are growing Trans-Atlantic traffic in ...

After recently celebrating my company's record breaking hot streak here at home, my new international business was quickly turning cold.

It looks like my American success formula wasn't working with my foreign partners who kept telling me to think differently in order to compete on their turf. If I only knew then what I know now; I could have saved countless hours, endless headaches and a bundle of money. I guess I should have done a little more homework first.

Before you plan on expanding your business and going global, consider these 8 vital points:

1. Are you a national player at home? The demand for your business in foreign lands will correlate closely with the size and success of your company at home. In today's age of easy information access, consumers and business professionals in most countries are aware of what's popular here in the U.S. and what's not. If you're a hot business here, chances are you'll experience pull demand for your brand "over there."

2. What business model should you use? Franchising, licensing, joint ventures and company owned business models each have their own pros and cons. Some require more labor or more upfront capital. Whatever model you choose will ultimately drive your earnings growth rate for years to come.

3. Get the right partner. Securing the right business partner in each country is the number one rule for success. Be sure to check your potential partner's financial status, influence and reputation in the local business community, access to resources and experience in bringing your country's brand to his/her home turf. In smaller countries, be sure to also check on his/her political influence and history since politics and business are often intertwined

4. Do your country homework. In some countries there may be tariffs or regulations that could inhibit your success. Be aware of the fact that the differences between countries can be significant. Don't get caught in the trap of referring to growth broadly (e.g. "Asia"), since neighboring countries within a geographic region can vary greatly. The bottom-line: Learn and know as much as possible about every foreign country you intend to enter before putting it onto your expansion list.

5. Do you have a support infrastructure? Will your supply chain logistics at home support foreign expansion or will you need alternative sources? Is your financial department set up to handle foreign transactions and currency conversions? And if someone across the world decides to call in the middle of the night will you have someone available to answer the call? Is your IT Department prepared to deal with foreign information operating systems?

6. Do you have a replicable operating model? When expanding internationally offshore it's important to realize that your cost structure will likely vary significantly. Supply costs, labor costs, real estate costs, seasonality can all pose significant hurdles to your success. Be sure to develop an operating model that's simple with main components that are clearly identified and benchmarked to your existing model.

7. Don't rush! Plan your growth by spreading risk with a balanced country portfolio approach. Make this similar to spreading risk when investing in the stock market. Otherwise, generating your growth opportunistically rather than strategically can result in poor and inconsistent communications, lack of field support, skyrocketing overhead costs, brand dilution and even lawsuits. Trying to manage a lawsuit that's 4,000 miles away in a foreign judicial system can not only cost you sleep but also pose a serious financial hazard.

8. Don't expect an overnight windfall. Growing internationally is a continuous learning situation. Your business will experience entirely new challenges, questions and uncertainties. There will be setbacks. Most businesses, even the most successful here at home, experience losses in their early years of international growth. Approach your international development with a five-year business plan for success.

Expanding internationally can be an attractive and lucrative business proposition. When carefully and strategically planned and executed, an international business unit will add to the value of your business overall. Plus, if your business is United States based then your international business unit can cushion a sagging U.S. dollar with favorable exchange rates falling to your bottom-line.

As International Vice President for Dunkin' Brands, Robert Kendzior authored the 2001 International Strategic Plan for the Dunkin' Donuts and Baskin-Robbins brand, encompassing 4500 locations in 39 countries outside of the U.S. Contact Robert today at http://www.linkedin.com/in/robertkendzior and let him teach your group how to take your business global.

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