How smart companies are expanding globally

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How Smart Canadian Companies are Expanding Globally

Globalization has given Canadian companies unprecedented access to many emerging economic regions, and for many mid-sized businesses, this access can mean new opportunities for growth. As reported in our June 2014 survey, the American Express® Survey of Mid-sized Companies1, 50 percent of Canadian decision makers said their single most important priority over the following six months was growing their business. But decision makers who are ready to expand internationally should consider making smart choices when it comes to planning growth initiatives.

You may have seen success with growing your business in Canada, but expanding in other countries may require a willingness to work with new guidelines, as well as preparedness to adapt to area-specific conditions and practices. Here are some key considerations.

Don't Rely Solely on What Works in Canada

Global growth can be an important phase for an organization, and you may need a different game plan when expanding to other economic regions. Your company may encounter legal issues, cultural differences, and bureaucratic hurdles, and it may be prudent to assemble management and legal teams who can handle the complexities of doing business abroad.

The security experts at Pinkerton note that you should be aware of the risks your business may face in other countries: "Picking the right location is critical and you must know as much as you can about the business climate, government agencies available, the labour force and the region’s tolerance for foreign companies operating in the area2."

Consider seeking expertise from outside your organization which may help you meet a variety of local requirements. As Law360 points out, countries like "China and Brazil bar foreign lawyers from advising on local law, but they can still practice U.S. and international law, which often governs project finance and corporate deal negotiations3."

Gain Entry Through E-commerce

66 percent of Canadian decision makers said they have tapped international markets as a way to acquire new customers; 52 percent said they are reaching out to find new suppliers for products and services; and 42 percent said they are manufacturing products internationally4.

E-commerce may be an avenue worth exploring. According to a Deloitte study, “Since 2009, global ecommerce growth in new markets has significantly outpaced the U.S. and other mature markets.5” According to Deloitte, there are four trends that are driving ecommerce growth and causing changes in international retail: (1) a shift from in-store purchases to online, (2) a rise in demand for global products from emerging regions, (3) a rise in international shipping, and (4) growth in mobile purchases6.

Consider which economic regions are relevant for your company to enter, or which territories may offer growth potential based on what your company offers—like Latin America, which InternetRetailer.com notes "is now the second fastest-growing international e-commerce market behind China7."

But before you launch your e-commerce venture, it may be prudent to have an appropriate plan. Think about designing your marketing and website experience to suit your local audience. Deloitte suggests there are a few operational considerations for retailers, such as: (1) Will you localize your product mix? (2) How will you handle global fulfillment? (3) How will customer service queries be handled? (4) How will government regulations and compliance affect your strategy8?

If your business can succeed in navigating through local preferences and requirements, e-commerce may present opportunities to grow international demand for your products and services.

Don't Beat Them—Join Them

Trying to outsell your competitors in a new territory may not be the only way to expand. Your business may be able to grow through the acquisition of another company, or by way of international joint venture. A joint venture with established entities in your new region may help lower some of the risks and challenges that can come with global expansion.

The Takeaway

Smart global expansion may require flexibility. Think about the ins and outs of local preferences, regulations, and business climate in your target regions, and consider looking at your organization's preparedness to meet new guidelines.

You may want to seek advisors who can help you navigate through area-specific challenges. Think about establishing an online presence to take advantage of ecommerce growth in developing regions. And consider whether you should be on the look-out for partnership opportunities with other companies that share your interests.

Sources

1. The American Express® Survey of Mid-sized Companies was completed online among a sample of 200 financial decision makers in Canadian mid-sized companies, defined as having revenues of $5 million to $1 billion annually. Interviewing was conducted by Ebiquity Research between June 2 – 19, 2014.

2. Miguel Martinez, Expanding a Business Internationally: Risk Factors, Pinkerton, March 11, 2014.

3. Erin Coe, Legal Barriers In China, Brazil Won’t Slow Firms’ Expansion, Law360, August 4, 2014.

4. 2014 American Express® Survey of Mid-sized Companies.

5. Thomas F. Quinn, Jean-Emmanuel Biondi, Anu Penmetcha, Laura Bailey, From Bricks to Clicks: Generating Global Growth Through eCommerce Expansion, Deloitte, Regional eCommerce Projections (2012-2016), page 3, 2014.

6. Thomas F. Quinn, Jean-Emmanuel Biondi, Anu Penmetcha, Laura Bailey, From Bricks to Clicks: Generating Global Growth Through eCommerce Expansion, Deloitte, Regional eCommerce Projections (2012-2016), pages 3-4, 2014.

7. Mark Brohan, Amazon Shows the Big Opportunity in Latin America eCommerce, Internet Retailer, July 21, 2014.

8. Thomas F. Quinn, Jean-Emmanuel Biondi, Anu Penmetcha, Laura Bailey, From Bricks to Clicks: Generating Global Growth Through eCommerce Expansion, Deloitte, Operational considerations for retailers, page 6-7, 2014.