Entering a new market without adequate planning or implementation can lead to diminished returns on a company’s investment. If a company is establishing a presence overseas for the first time, management should go into a country with sufficient knowledge of the business environment.
The challenges begin even before a border is crossed. Supply chains must be established, vendors and distributors need to be identified, organizational structures must expand to reach overseas, global processes must be established, and intellectual property must be protected.
Following are the perspectives of a number of manufacturing executives working on a global scale on the hazards and difficulties of setting up business on unfamiliar shores.
Establishing vendors and sourcing
Companies need vendors to operate in a secure and compliant manner, for peace of mind and also because certain compliance frameworks require it. But it can be difficult to set up a new network of suppliers.
As the CFO of a sports and arena lighting manufacturer put it, “We had never done any manufacturing outside the United States. So that whole dynamic of trying to find vendors, and how do you find a supply chain and how do you do a facility search, that was all new to us just generally. I would say it probably ratcheted up the complexity of the process by 50 percent.”
Creating the organizational structure
Companies operating globally for the first time should focus on the structure and duties that need changing.
That means being on-site on a regular basis.