Global Expansion –
Get it Right the First Time Around
October 22, 2009
(312) 642 4647
In the very near future, U.S. businesses will fall
into one of two extreme categories:
1) Skilled players in the global marketplace, and
2) Tentative players that forced themselves out of
A wait and see mindset is nothing short of organizational suicide.
On the other hand, a reactionary, ill-conceived global expansion
is no improvement. That too spells disaster.
When KPMG Global Enterprise Institute surveyed U.S. middle market
companies in late 2007, it found that 58% of all businesses surveyed
planned to increase their global presence over the next five years, and
one-third planned to maintain their current global presence.
Interestingly, in the same survey, fewer than half of all respondents said
their expansion efforts over the past two years had been successful;
therefore, 50% were unsuccessful!
With failure rates like these, it’s time to ask “What are we doing wrong?”
Most importantly, what must be done differently to improve chances
for future success in the global marketplace?
Top challenges companies face:
1. Overseas acquisitions fail to deliver
2. They struggle to expand lacking the knowledge and data as to where
in the world they should go and what tactics to implement
3. Money and management effort is wasted, often because of
unsophisticated management approaches
Why companies face these challenges?
1. Unclear strategic direction
2. Underestimated risk
3. Poor alignment between vision, mission, resources,
strategy and operations
Phase one –
Phase two – Phase three – Phase four –
analysis and Developing the implementation
marketing mix to
screening: plan and control
Environmental Matching mix Marketing plan Implementation,
uncontrollable, requirements development evaluation,
company culture, measurement,
Product Situation control
Host country (s) Objectives and
Promotion Objectives standards
Dist./place Strategic options Assign
culture Tactics responsibilities
Evidence Budget Measure
1. Determine international demand
• Is there demand for your products/services
2. Adapting to customer needs
• If so, should those products be adapted?
3. Entry strategies
• How to enter into global markets?
Market Expansion Strategies
The decision to expand by:
– Seeking new markets in existing countries
– Seeking new country markets for already identified and
served market segments
Seriously, why go global?
! Increase profit ! Competitive
! Take advantage of pressures
product lifecycle ! Overproduction
! Achieve Economies and excess capacity
of scale ! Declining domestic
! Saturated domestic
Social and Cultural Environments
Culture, at its basic level, is the
collective mental programming
of people in an environment.
“Culture is more often a source of conflict than of synergy.
Cultural differences are a nuisance at best and often a
Prof. Geert Hofstede, Emeritus Professor, Maastricht University.
Researching and Analyzing
• Market potential
• Consumer / customer attitudes and behaviour
• Channels of distribution
• Communications and media
• Market sources
• New products
• Competitive business strategy and goals (mission and
rationale of the company)
• Competitive functional strategies and programs
(target markets, marketing mix, etc.)
• Competitive operations (morale, employee transfers,
• Balance of payments, interest rates, etc
• Prescriptive information e.g incentives, controls,
• Country monetary and fiscal policy
• Expectations of bankers, traders, analysts, etc
• Government policy in relation to its own
• Human resources
• Raw materials
• M&A’s, joint ventures
• Economic factors - e.g. growth
• Social factors e.g. customs, attitudes
• Political factors e.g investment climate
• Scientific and technological factors - major
developments and trends
• Management and administrative factors e.g. report
Sources of information
There is such thing as too much
Five rules for international
• No. 1:
– What information do I need?
– Where can I get this information?
– Why do I need this information?
– When do I need this information?
– What is this information worth in $?
– What is the cost of not obtaining this information?
• No. 2:
Start with desk research
• No. 3:
Identify the type of information that is available from
• No. 4:
Know where to look (or find somebody that does)
• No. 5:
Do not assume that the information that you gain is
comparable or complete.
Negotiations Across Countries
High context culture
– The meaning of individual behaviour and speech changes
depending on the situation
– Nonverbal messages are full of important meaning (read
between the lines)
– Contracts. Written contracts are not always enforceable as
new people move into executive positions
Low context culture
–Intentions are expressed verbally
–The situation does not change the meaning of words
Measuring & Controlling
• Set targets – quantified objectives and/or budgets.
• Determine the method(s) of measurement
• Measure the results at the end of each period
• Compare results against the targets and identify
• Identify and implement any necessary corrective
Techniques for Measuring &
• Financial analysis e.g. ratio analysis, variance analysis, cash
flow, monitoring capital expenditure.
• Market analysis – i.e. market demand, market share, marketing
• Sales analysis – e.g. sales targets, selling costs.
• Physical resources analysis – analysis of plant and equipment
utilisation, other measures of productivity and product quality
• Systems analysis – consider the effectiveness of implementation
and application of your resources.
• Others. . . . . .
Just Do It!
“The important thing is not being afraid to take a
chance. Remember, the greatest failure is to not try.
Once you find something you love to do, be the best at
doing it.” Debbi Fields
Trends Challenges Opportunities
Differences/ Winning Growth
Similarities Business Industries