Canadian Plastics

Before expanding outward, take a look inward

As more companies are lured into global markets by growth prospects double and triple that of their home market, they need to remember that the market potential of a new geographic area is only half t...

January 1, 1999   Canadian Plastics



As more companies are lured into global markets by growth prospects double and triple that of their home market, they need to remember that the market potential of a new geographic area is only half the equation. Companies need to evaluate their strengths, weaknesses, available resources and the level of commitment to growth in foreign markets.

Key issues to consider include:

Success factors specific to your company: You must understand the keys to your company’s success to ensure that you evaluate the company’s match with the target market and not just its generic market characteristics.

Commitment of top management: International expansion is a time-consuming, costly undertaking. Without the solid support of senior management it is doomed to fail.

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Availability of financial resources: Financing international ventures requires careful planning and evaluation of the effect of the new financing structure on the company’s current financial situation.

Level of staff experience: Dedicated personnel with previous experience in international business can often make the difference between success and failure in new markets.

Attitude toward risk: Many exceedingly risk-averse companies have successfully expanded into high-risk markets–they have just carefully planned and structured their operations to reduce the risks to a comfortable level. Acknowledging your company’s tolerance for risk is a critical step in defining the method of your market entry.

Set goals: Globalization demands that a company set realistic and achievable goals-and stick to them.

Reprinted with permission from Ernst & Young LLP, UpShot, October 1998


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