Making the decision to move from domestic to global operations shouldn't be taken lightly by any business. In some cases, entering certain countries, or even going global period, isn't the right move. Key factors to consider include the relative risks to rewards, access to necessary resources, ability to control costs and adaptability.
Relative Risks to Rewards
Weighing the risks of going global against the rewards is a broad concept, but primary focus is on whether your company's current strengths align with the opportunities in a marketplace. Fast Company pointed out in an April 2014 article that foreign markets often require that companies have specialization in select areas to achieve success. Going into a country, investing substantial resources, and then finding out it isn't a good alignment is a waste of time and resources.
Fast Company indicated that test marketing prior to a massive launch in a foreign country helps reduce risks. However, you must be prepared to invest significantly to establish and maintain momentum.
Access to Necessary Resources
In some cases, globalizing is as much a resource grab as a way to expand the size of your market. American countries sometimes enter foreign markets for greater access to certain resources, such as gold, oil and copper. People are another primary resource that companies must consider. Entrepreneur reported in April 2013 that American companies often enter foreign markets either to find more highly-skilled workers, or to find cheap labor. Before going global, you want to make certain you not only have the resources needed to survive, but that you can also optimize resources across your operations.
Ability to Control Costs
In August 2012, Forbes listed increased costs as the No. 1 risk of going global. A business must consider two basic elements in its ability to control costs. One is whether the company can connect with international suppliers and partners to optimize processes such as distribution, transportation and logistics. Another is whether government regulations create overwhelming hurdles to cost-efficiency. Forbes also claimed some international governments establish restrictive regulations as an impediment to foreign business entrants.
Level of Adaptability
Being able to adapt to the culture in a foreign market is critical to global success, according to Entrepreneur. Even large American companies, such as Walmart and McDonald's, have struggled in certain countries based on a mismatch of culture and values. In some European markets, for instance, the culture doesn't readily support intense low-price structures in the same way the U.S. culture does. Adaptability also means changing products, services or branding messages to fit the needs and preferences of local customers.