Global Invest

Is it Time to Reassess How Much to Globalize Your Business?

The global marketplace is pressing into the most localized corners of domestic trade. This brings additional competition and price pressures into every market imaginable, challenging all suppliers but especially challenging diverse suppliers. On top of all the other obstacles to having a successful business, competition from all sides is just another burden.
— By William Bell

How much of a burden is it really? Are there ways for your business to transform the international competition burden into a strategic alliance for broader success? How would such partnerships happen?

Laying The Foundations For International Partnerships
Though international businesses can be seen as a threat and a burden, smart diverse businesses in America can work around the hurdles of foreign competition by building strategic business alliances. International partnerships have the ability to help open new markets, broaden the scope of the business, and bring in new best practices for cost savings and efficiency.

Naturally, finding the right partner is critical. There is no global phonebook with a bookmark pointing out the perfect person or group. Instead, relationships have to be built deliberately.

This can be done by researching trade groups and international societies in your area and becoming an active participant. Make a point to attend local meetings, and seek out any relevant conferences or trade fairs you can attend in your region or supplier field. By being active, you become a known entity, helping to draw people to you even as you seek connections.

Overcoming Linguistic And Cultural Barriers

Working to build international partnership and strategic business alliances will run your firm into both language and cultural barriers. These can be daunting, but they can be overcome. The key is to cultivate an open mind and show a willingness to make the effort to understand the other party’s ways and needs.

Making a good faith effort to communicate and work together smoothly is at least half the battle. Hiring a translator to work with you on visits or as a go-between can show your seriousness about the venture, and the costs are not prohibitive for major languages. Documents can be translated inexpensively through upwork or if you have no in-house experts.

Putting in the effort to build common ground and a common understanding will let you see if there is a deeper cultural and business fit between your firms. Companies and suppliers who are equally willing to bend and grow to work with you make good partners, as do businesses where there is a clear advantage to both members of the partnership.

Managing Risk Appropriately
Still, even as you work to build an interconnected and open partnership for business, there is a need to manage your risks appropriately. In international business partnerships, there are financial, operational, cultural, and even political risks to be overcome.

Financial risks can be prohibitive. You can manage some of these risks by monitoring your investment more closely than you would otherwise do and also by seeking additional financing for the venture. Small, local banks may not be able to finance an international partnership, but larger institutions, intercultural exchange groups, venture capitalists, and even government agencies have surprising pockets of funds for assisting with small business growth in the international space if your firm takes the time to look.

Operational risks are also a major concern. Copyrights and proprietary processes are not respected abroad as they are in the States. Best practices dictate limiting data exchange on business critical production secrets where possible or keeping core functions strictly in house. Where this is not possible to make the partnership work, explicit contracting and monitoring of data is an acceptable substitute.

The cultural side of things encompasses both the ethnic cultural barriers and corporate cultural barriers. Basic research into intercultural norms can diffuse many potential risks to multi-national partnerships. Due diligence in advance can also help prevent partnerships between organizations where there simply isn’t going to be a good fit.

Finally, in some instances the political side of things needs to be considered. What sort of relationships do the governments have with the U.S.? Are there international diplomatic problems in the region? What is the potential impact of those items on your transactional business operations and your corporate goodwill? Weighing the costs versus the potential profits can be time consuming, but it prevents entering into relationships with your eyes closed to the possible outcomes.

Cultivating Relationships of Trust
Despite the risks of an international partnership, when they work it can be an incredible boost to diverse businesses. Communication lines need to be smooth and ongoing, with a culture of mutual trust being actively sought.

Building relationships of trust and open communication doesn’t happen overnight. In some cases, it may be necessary to appoint a communications champion for partnership projects who ensures that all relevant data is being shared. In others, making the investment in a trip to a neutral site or to the partner site can have an invaluable effect on the level of closeness and openness between the organizations.

Technology can also help to bridge gaps of space and time to enhance relationships. VOIP systems, instant messaging, and careful scheduling can make the other side of the world just a quick call or click away. Bringing both sides of the relationship up to the same technology level by leveraging the free and low cost tools (such as Skype) that exist can help even small or cash-strapped MWBEs make an international relationship work.

Goals, Numbers, And Graceful Exits
Even as you are putting in all of the relationship building time and risk management effort, it is important to set up larger progress milestones and goals for the relationship. Whatever metrics are the most relevant for your business to get out of the relationship - ROI, number of new accounts, percentage of market share - should be identified early and checked often.

Your company can measure the success of a partnership in hard numbers or in softer benefits. The motivation behind pursuing the partnership can help dictate that part of things, though you should always be sure that your pros outweigh your cons. Gaining three new accounts overseas may be wonderful, but not if it takes 100 hours and requires a full-time translator to land each small new account. Be able to stand back from your numbers and your excitement over any international pairings to ensure that the larger picture points to long-term success and profitability without derailing your existing core operations.

Still, at the end of the day, even the best intentions may not work, and it will be necessary to terminate the partnership. Plan for this contingency from day one, so that both sides understand what would be necessary to leave the partnership, and why such a decision might be made. Ground rules about core corporate ethics values, necessary revenue numbers, or efficiency points can make the decision pure business. This eliminates drama and allows for professional and graceful exits from any one partnership, permitting your firm to freely reach out to other opportunities in this wide, wide world.