- New report identifies “softer” aspects of business expansions, such as sourcing new employees who support and enhance the brand’s existing culture, as a top concern
- Other findings include the desire to open new markets and gain market share as the main drivers for corporate expansions abroad
- A location’s level of taxation or skills shortages do not seem to be as much of a concern to companies expanding overseas as might have been expected
A new report released on December 3rd, by The Economist Intelligence Unit (EIU) states that bringing new people into a company’s culture and values is among the biggest challenges during international expansions. Corporate overseas expansion: Opportunities and barriers, sponsored by TMF Group, builds on a survey of 155 senior executives who have knowledge of the issues involved in their company’s expansion into foreign markets.
Among those interviewed for the report there was near-unanimous agreement that maintaining company culture while respecting local customs and cultural differences is a fundamental objective for a successful international expansion. By contrast, policymakers may have overstated the importance of a location’s level of taxation, as this seems to be far less of a concern in companies’ expansion projects than might have been expected.
The survey also finds that a desire to open new markets and gain market share are the principal drivers of corporate expansions abroad, selected by 59% and 57% of respondents respectively. This is especially the case for European countries, as sluggish growth in domestic markets has encouraged many European companies to seek stronger returns overseas. By contrast, the majority of respondents in Asia-Pacific (53%) are particularly driven by the need to find new sources of capital.
Martin Koehring, the editor of the report, said: “It’s clear from our report that once a company’s executive team has identified its scope for an overseas expansion, much of the success will rest on comprehensive planning. This includes ‘softer’ brand-authenticity elements, such as maintaining the company culture and values, that are in some regards more pressing—or perhaps more challenging to master—than ‘harder’ aspects such as currency hedging, integrating operational systems and ensuring compliance with local regulations.”