This is a repost of an article by Rob Vandenberg that originally appeared in Business Insider.
These Mistakes Will Kill Your Company's Prospects When Trying To Go Global
In today's interdependent world economy, globalization must be approached with great thought, care and tenacity. Yet many companies march into foreign markets with a Napoleonic mindset, trying to force their way into a win, when they really need develop effective, cultural strategy and establish a respect for the nuances of their battle.
The mistakes outlined here apply to all shapes and sizes of business, from the little guys to multinational giants. Avoid them, and your global prospects will be a lot brighter.
Thinking strategy is for suckers.
Entering a new market without customized plan increases your risk of failure. Before opening up shop in a new country, have good answers to the following questions: Why will consumers buy your products instead of those of the local competition? What is your long-term plan to stay and thrive in your market of choice? How does your entry plan into one market fit into your overall globalization scheme? How can you use what you already have rather than recreate the wheel?
In 2009, McDonald's found out the hard way that thriving in Iceland requires more than scale and a name. When the Krona collapsed in 2009, McDonald's, which imported all of its ingredients, could no longer afford to stay in business in Iceland. The McDonald's case shows that building a strategy according to your target market, and covering that market's unique contingencies, can make or break success.
My way or the highway.
"Avoid embarrassment - use Parker Pens." That was once the slogan of the Parker Pen company, a US-based manufacturer in business since 1888. But, as Adam Wooten writes in his article on the company, what works in one market doesn't necessarily work everywhere (Disclosure: Wooten now works for Lingotek):
"…When Parker Pen decided to enter the Latin American market, it translated the slogan into Spanish as "Avoid pregnancy — use Parker Pens," apparently using the false cognate 'embarazar' or 'embarazo.'"
To avoid similar embarrassment—or worse—take time to understand customer preferences, not to mention their language, before opening your doors in a foreign country.
Ignoring local talent.
Mixing in local talent with experienced expats removes cultural, linguistic, networking and management barriers. Locals have connections with local businesses, government and the community. An expat-only team, while equipped with an intimate understanding of company culture and direction, comes with a steeper learning curve.
One worst-case scenario comes from the failure of the American Internet megacorporations—Google, Yahoo, eBay and Amazon—in China. An IT Times article, translated here from the Chinese (Hyperlink: http://bigapplezlp.wordpress.com/2008/01/18/why-us-internet-giants-failed-badly-in-china-summary/), lists ten major mistakes the Americans made in their attempts to conquer the Chinese Internet market, including avoidance of person-to-person contact, passive advertising, focusing on a white-collar market—and recruiting the wrong people.
"The recruiting process of the international Internet companies emphasized … similar ways of communication and the agreed-upon untold rules," writes the Times. "[These companies hired] people from Hong Kong and Taiwan or people [with an] overseas educational background. They were all similar. No wonder [the companies' failed] strategies passed without any argument."
Underestimating the time and money needed.
The time and financial commitment for a global strategy can be heady. The overhead of launching and adapting your strategy, combined with the inevitable surprises and costs, might put you in a sticker-shock situation. Whether this situation is fatal depends on how deep your pockets are. Tiffany& Co., the beloved US jeweler, found out only after launching its boutique-style China stores that Chinese consumers prefer shopping in large venues with many different shops. Tiffany's cozy, simple, standalone stores, designed for US preferences, were seen as undesirable. Perhaps Tiffany can afford a complete cultural revamp, but could you? The question is worth pondering.
Going at it alone.
It worked for MacGyver, but that doesn't mean it will work for you. Many business-to-business supplier scams take place in the United States; imagine that craftiness transposed on a foreign culture. It pays to establish solid, trustworthy partnerships in the countries you plan on penetrating. Good relationships with your suppliers, buyers, resellers and potential customers help you establish yourself more quickly while mitigating the number of mistakes you might make.
In an increasingly complex global marketplace, the biggest and strongest players won't necessarily win. It pays to care—about strategy, partnerships and the nature of the marketplace. As the mistakes above show, thinking, rather than bulldozing, will put you on the fast track to global success.