5 International Operating Challenges – and How to Solve Them
In today's global economy, managing offices, employees and projects around the world is part of doing business. Netflix, Macy's and Pandora are just a few of the high-profile organizations that are currently expanding into new markets.
While branching out can help drive business growth, multinational companies also know that operating globally comes with its own complexities. A Harvard Business Review study of 20,000 companies in 30 countries revealed that businesses that grew internationally continued to lose money in their new markets as long as five years after the expansion, on average.
Whether you’re operating outside your home country for the first time or have been multinational for years, turning to an experienced team can mean the difference between success and failure. Read on to learn how engaging outside resources helped companies face these five common international challenges successfully:
- You’re opening a site in a new country. When expanding somewhere new, you don't know what you don't know. Knowledge gaps on regulatory, financial or cultural issues can pose big roadblocks. Consider partnering with someone who has broad-based knowledge, from facilities setup to accounting regulations, to lead the process.
Success story: In a cost-saving move, a ladder and scaffolding manufacturer planned to relocate its plant from Germany to Hungary. By partnering with an outside interim executive who spoke Hungarian, had managed a local factory and knew how to handle the complex SAP setup, the manufacturer maintained the same high-quality standards in its new factory.
- You want to source or retain talent. From key executives to factory workers, the hiring process looks different in each country. In Europe, for example, interim managers are much more widely accepted than in other parts of the world. Once you've made your offers, keeping everyone happy can also be tricky when you don't know the region. Someone who's familiar with the culture can help you navigate talent development without stepping on anyone’s toes.
Success story: A Chinese powdered metal blending company with 80 percent turnover among its managers asked for outside help to stop the exodus. With experienced help to develop and implement a five-year employee plan that included job training, English lessons and a six-month work stint in the U.S. – a plum role for Chinese resumes – the company didn’t lose a single manager during those five years.
- You’re reorganizing. Whether you're acquiring a new company or looking to run functions more efficiently, reorganization can come with growing pains. A partner who brings a global mindset, as well as local knowledge, can help you discover financial and operational opportunities, such as moving a warehouse to reduce export taxes, and get everyone in the company on the same page.
Success story: An American company that bought two competing Brazilian companies had trouble getting the former rivals to report to one another. Interim leaders from outside the company who worked in Brazil previously helped to set up a common enterprise resource platform and pay structure and then mediated a series of discussions between the companies, eventually establishing a spirit of cooperation.
- You're implementing a new process. Rolling out a new process or software in one location is hard enough. How do you grapple with a global implementation? Don’t assume that your standard operating procedure is the same as in other countries. Someone familiar with the various cultural and operational issues can help build understanding and determine where to start to be successful.
Success story: After a Swiss technology firm tried -- and failed -- several times to install SAP across the company, it made the decision to bring in an interim executive who recommended switching the pilot location from Germany to Switzerland because of the higher production share there. The plan went so well that the technology firm also entrusted the consultant with its SAP launch in China.
- You’re struggling to understand a new culture. How long can you keep working on a construction site after a typhoon is forecast? Working in new places means facing all kinds of unexpected questions. It also means being sensitive to cultural norms, such as the typical number of hours in a workweek. A seasoned expert can help you navigate cultural issues, from the meteorological to the interpersonal.
Success story: When a bioenergy firm struggled with the construction of a new plant in Hong Kong, it brought in an interim manager who was familiar with the region. The manager worked with the local partners to get their buy-in and guided the bioenergy company through Hong Kong’s administrative procedures to complete the project successfully.
Steps for Success
Whether you're opening a plant or reorganizing to boost your bottom line, consider these steps to make your international ventures successful.
- Engage help early. An expert in your target market can help you decide whether it’s the right move; educate you on regulatory, financial and cultural issues; and provide an extra set of hands, from strategy through tactical execution.
- Start by asking, “Why?” How will this move support your business strategy for the next three to five years? Define specific metrics to measure your success. Market studies can help you determine if your business is viable in that part of the world.
- Refine your plan. Will you establish a legal entity or use a direct representative? You may also need to modify your product to accommodate electrical or other standards.
- Prepare for objections and obstacles. Getting buy-in from key stakeholders is essential. A partner who has worked in your chosen markets can address concerns and help you make your case.
Managing a multinational presence successfully isn't easy. With the right support, however, you can overcome your global growing pains.
Face challenges anywhere in the world with confidence.
Patina is a founding member of Globalise, a global group of leading interim management firms with a proven track record of success in solving your most pressing business issues. Results-oriented and fast, our interim managers and executives bring the specialized skills you need to wherever you need them.
Talk to us today about how we can help you solve your challenges.