Tech Connection shares international expansion best practices
A panel of business leaders from a recent RSM Tech Connection event shared insights, challenges and best practices related to international expansion strategies and global growth. Key best practices discussed included:
- Alignment of business culture: A similar culture between the U.S. business and its foreign entity translates into a seamless adoption of processes, production, people and more. It also promotes scalability and further business expansion.
- Consistent governance and risk management: As with aligned cultures, having consistent governance and risk management procedures between domestic and foreign entities helps ensure regulatory compliance and creates a proactive environment to stay on top of risks.
- Outsourcing considerations: In some countries it’s difficult to find talent on the ground with knowledge of U.S. generally accepted accounting principles. Given the time in training and oversight, it might be effective to engage an outside vendor with the desired financial and accounting skills.
- Open communication: With international business leads and associates an ocean away, it’s essential to maintain consistent and open communication. Panelists indicated the usage of Skype and Google Hangouts was key, but nothing replaced the value of getting on an airplane and having regular face-to-face interactions with international colleagues.
While there is great opportunity for international expansion for technology companies—with the chance to venture into new markets and leverage new talent, processes and enhanced technology platforms— panelists shared challenges to be aware of when expanding in foreign countries, including:
- Management and decision-making mismatches: Some companies are located in countries where the culture and management style is more hierarchal and contrary to the open structure and collaborative decision making styles U.S. companies are more accustomed to. Panelists said it’s important for technology companies to work with foreign company leaders to align management styles, otherwise these inconsistencies will cause business disruption and could jeopardize operations and growth.
- Risk concerns: Unfortunately, in some countries, due to a turbulent political climate or other unrest, bribery and corruption could be the business norm. To address this challenge it’s essential to fully research the country’s business environment, formal laws and informal dealings, and have competent professionals on the ground to oversee business interactions and risk management.
- Disparate financials: It’s difficult to manage the financials offshore of an expanded international business, and when accounting and reporting systems are varied between domestic and foreign entities that effort becomes even more complex. If it can be done, the ideal is to unify financials, controls and accounting systems to one streamlined strategy across the enterprise.
We have entered an era of unprecedented technological change where technological advances, connected consumers and sector convergence are driving the pace of change. Businesses will need to transform to succeed. This means expanding internationally, developing cutting-edge technologies, focusing on innovation, fostering collaborative alliances and acquiring key talent—all of which are critical elements to implementing change. While this transformational change will bring with it a host of challenges, it will also create significant opportunities for companies to grow, expand and succeed in a global environment.
When a company is considering expanding internationally, it is critical that a detailed assessment of the business environment is undertaken at the earliest opportunity to ensure that opportunities and challenges are aligned with the business and risk culture of the company. In undertaking this assessment, it will be important that the company seeks professional advice from advisors as well as local government agencies.