Companies aspiring to go global must have done their research and understand that when successful multinational companies ask themselves ‘what is global business?’ the answer comes from a deep understanding within the organization itself.
In a report featured in the Harvard Business Review, international business experts Douglas Quackenbos, Richard Ettenson, Martin Roth, and Seigyoung Auh discuss an assessment tool they’ve developed to help gauge internal readiness for selling in a global market. They explain, “ External factors only set the stage for an international opportunity; they are just one part — and not necessarily the most important one — of global expansion success. And while companies recognize the need for internal capabilities such as language and cultural adaptation skills in a new market, they tend to overlook other, less obvious internal requirements, only to discover too late that they are ill prepared for what awaits them.”
The diagnostic tool for businesses wanting to adopt a global business strategy, provides 28 statements to be answered on a scale of 1-5. Says the developers,“The tool can serve as a preemptive reality check of the firm’s capabilities in advance of pursuing an international venture.” In short, these experts in global business strategy say a company’s internal readiness is key to being able to meet the changing landscape of international sales.
The assessment is divided into seven key attributes. And a company with these internal attributes already in place is much more likely to succeed in the global marketplace.
The first internal attribute necessary for a company considering expanding into the global marketplace is attitude. In order for a company to lay the groundwork for international sales, the company must prioritize global business expansion.
It’s been said you get what you measure. The same can be said of prioritizing. Your company will respond to the top priorities. To successfully develop your brand into overseas markets, expansion needs to be a priority of the company, not just a wish.
What is global business if the development isn’t given the resources and time to make it successful? Spreading into global markets means the operation should be discussed in every major meeting and regularly reviewed to ensure the program has what it needs to succeed.
Executives need to talk about the expansion and promote it. It needs to be safe for those directly responsible for the initiative to take risks. Success should be very publically rewarded. And some failures are to be expected. Here are some methods to show prioritization of expansion:
- Reviewing initiatives at every internal meeting
- Giving global managers and leaders the titles to reinforce the significance of the position
- Providing ample opportunities for HQ and international leaders to learn from each other
Companies who show willingness to prioritize global markets rank highly in the attitude portion of the assessment. Management may say they want to pursue global sales, but if a heartfelt attitude towards becoming a multinational company doesn’t really exist, the company isn’t ready to go global.
Wanting to go global and having what it takes for a winning global business strategy are two very different things. In order to successfully introduce products overseas, a company needs to have the right knowledge and skills--the aptitude for expanding in global markets.
The developers of the global business strategy assessment tool insist that in order to be successful in the global market, the company must demonstrate a high level of international business aptitude. Company traits pointing to aptitude include:
- “Aggressively” training staff
- Hiring external experts as needed
- Integrating internal company experts with the international team
Apart from hiring and training the right people, much of aptitude is being able to effectively share information across the company. Having a cloud-based Customer Relationship Management system (CRM) that updates across global boundaries is essential. Proper information on supply chain, sales pipeline, accounts, and shipments will decrease overhead and streamline functions. The right reports will be available across all offices and time zones. Cloud-based CRM can ensure every office has the right information when they need it.
Selling in a global market also requires a CRM program to be adaptable to the varied international requirements. Look into platforms such as Salesforce , which lets you plug in pre-integrated services to import global market data. Also consider having the option to integrate back-office systems, like billing and client reporting.
Trait three and four, magnitude and latitude, align the opportunity with the goals and capabilities while taking on a broader mindset.
Magnitude, in other words, requires that the scope of the resources allocated to meet the global expansion should match the priority the company gives the goal. For instance, if it is top priority for a product line to succeed in the new market, then the company needs to be willing to allocate enough sales, marketing, management, and support resources to the task. Would-be global companies need to make certain all stakeholders understand international markets differ in size and offer different opportunities than the current portfolio offers.
That’s where latitude comes in. International sales requires a broader mindset and the ability to adapt marketing policies and practices, according to Harvard researchers. Being able to think laterally about business practices helps firms wishing to expand into international markets succeed. For example, in its heyday, KFC offered 50 menu choices in China while offering only 29 in the US.
To ensure your company’s objectives meet the scale of the overseas expansion while appreciating the differences in international markets, the researchers insist companies need to have the mindset of:
- Ensuring all team members are aware of the objectives and pilot programs
- Scaling the initiative either up or down to ensure the project is both significant internally without overwhelming the organization
- Educating HQ on prevailing target-market standards
- Training stakeholders on cultural differences
- Proving the “business case” for the initiative despite different overseas standards and practices
In order to enter into the global marketplace, a firm’s legal and ethical practices need to allow for overseas flexibility while maintaining compliant practices. Quackenbos and his colleagues refer to rectitude as a company’s willingness and ability to meet the standards in the company’s native country as well as the standards abroad.
Exactitude, as defined for the purpose of the assessment, means that the corporate culture tolerates some financial ambiguity and market uncertainty. It needs to be safe to take risks.
Companies open to the following philosophies of rectitude and exactitude are more likely to succeed in the global marketplace:
- Identifying competitive practices in a new market to ascertain the company’s willingness to engage in competition
- Holding open dialogues about potential issues, realizing some issues will be discovered later
- Clarifying objectives and company ethics before selling in the new global market
- Distinguishing between strategic objectives versus only financial ones
- Realizing that market success may have only a modest impact on the overall business
- Realizing that forecast deviations are to be expected
Issues of rectitude and exactitude can be navigated through frequent discussions between corporate management and the leaders of the international offices. CRM programs can help with data sharing between deal teams, trading desks, research analysts, and institutional sales reps while also tracking historical activities associated with specific deals and clients. These features eliminate administrative overhead while allowing executives and managers to focus on maintaining legal and ethical practices within the new market.
The last trait of successful multinational companies, fortitude, refers to a company’s strength and commitment to the global expansion. Recognizing there will be setbacks is important, but through it all, the company should show the ability to:
- Clearly communicate commitment to the global strategy
- Publicly reinforce goals without publicly blaming or punishing employees involved in failed initiatives
Fortitude means keeping the multinational course once it’s been set and weathering any storms that may come.
The Harvard global business experts asked over 300 business professionals, 38% of them at the VP level or above, to rate their international company’s traits with the assessment tool. On average, 77 percent of the companies who had excelled in international sales said their company excelled across the 7 internal traits identified by the researchers. Just 31% of companies who were not successful in the global marketplace identified the 7 traits in their company.
This research is significant because it gives firms a solid way to assess their readiness for an international market. But there is more to the assessment tool than simply checking off a set of qualifications. By assessing your company across the 7 attitudes, Quackenbos, Ettenson, Roth, and Auh are demonstrating that the success of international business opportunities comes from within the company rather than from the global opportunities.
What global business boils down to is the ability to prioritize your global initiatives while allocating the time, talent, and resources to the project. Expecting that there will be hiccups along the way is essential to the global sales strategy as is allowing flexibility for unexpected events and fluctuations with the ability to stay firm in your global initiative goals.