Success in one’s home country often fuels the dreams of visionary entrepreneurs and executives to expand their direct sales business into foreign territories. However, achieving success abroad is no walk in the park. Many companies that have thrived at home have stumbled when attempting to replicate their success in foreign markets. The pitfalls are not few, and the journey can be treacherous.
This article provides a checklist of critical questions that managements should ponder before embarking on the journey of international expansion:
Is it truly worth the leap?
Market research is not just a fancy concept in marketing. You might be having field leaders telling you they have very good connections in market “A” who are dying to build your company’s business there. This is so common. I would suggest listening to them carefully not to miss any opportunities, but after that, doing your own due diligence, too. Make sure your work consists both of comprehensive desk and field research.
Is the general business climate favorable in that market?
Some countries place additional demands on foreign investors that aren’t imposed on domestic businesses. Some others put several restrictions on profit transfers abroad. Similarly, direct selling might not be well-received by the local authorities or by the public. Some or all of your product categories might not be welcome. Make sure you check all this well before putting a step on that market.
Should we open a wholly owned subsidiary or establish a partnership with a local?
The choice between establishing a wholly owned subsidiary or a partnership with a local business can be pivotal to your success. Consider the legal and economic pros and cons of each option, as they may vary drastically from one market to another. In the case of a partnership, conduct a rigorous background check and avoid jumping at the first offer from a successful local field leader.
Do we have the sufficient “extra” resources to start a business there?
Even if you have already appointed the key staff in that new country, there will still be a lot do at home to prepare the company for a launch abroad. Don’t let this become an additional workload on your already overwhelmed managers’ shoulders. Similarly, don’t let the launch bring unplanned, unforeseen stresses on your company’s finances, too. These can easily hurt your existing business at home.
Are we going to able to sustain and grow the business in that market?
Managing international markets is a game with its own set of rules. Different markets boast diverse legal, political, socio-economic, and cultural characteristics. And this reality requires different sets of skill and knowledge than those you need for running the business at home. Direct sellers on the field? They are so diverse in their attitudes, expectations, and approaches, too. Additionally, make sure you will be able provide a seamless product supply to that country as well.
Remember, adding another country flag to your company’s website might enhance its prestige, but it could also bring in a disaster if things don’t go as planned. The journey of global expansion should never be an ego trip, but rather a strategic and well-prepared endeavor.
If you’d like to gauge the level of diversity you’ll encounter when venturing into new markets, you can explore detailed country reviews available here.
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Hakki Ozmorali is the Founder of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki Ozmorali is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.
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