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April 16, 2015 Article 2 min read

Plante Moran Global Services Partner Lou Longo has a saying: “You don’t have to be internationally active, but you do have to be internationally aware.” Globalization is here to stay, and businesses are under pressure to develop more sophisticated international strategies—even though many don’t have an international strategy at all. 

Here’s Lou with his thoughts on international strategy and how that strategy can vary from company to company. 

What are service companies’ most common concerns regarding expanding internationally?

Complexity, risk, and cost — and for good reason. Companies often rush into a new market only to be met with less than desirable results. Some don’t consider the impact of currency fluctuation on their costs; others skip due diligence—never a good idea!—thereby, putting faith in people they shouldn’t. 

So the lesson is not to rush?

Absolutely. A reactive approach, where customers — or competitors — are the driving force of your strategy, doesn’t position you for success the way that learning your customers' needs and proactively working to meet them does. It’s also imperative to consider what happens if it doesn’t go well. What’s the cost and fallout of a failed expansion? 

Talk to me about “internationally aware” versus “internationally active.”

All businesses today should be, at the very least, internationally aware. At a minimum, companies should be able to identify their market share in key global markets; their major competitors in those key markets; a competitive price in each of those markets; and environmental factors that could significantly impact their business, such as geopolitical pressures, governmental industry restrictions, IT infrastructure, language, currency, and accessibility to qualified talent. They should also be aware of government and industry standards or other third-party influencers that could disrupt their business models. 

And if companies can’t?

They may wake up one day and realize that their competition is undercutting them on price or delivering more value at a similar price, and they’ve lost market share. There’s a delicate balance between opportunity and risk. When developing an international strategy, it's important to balance the evolution of international activity with the degree of complexity, investment, and uncertainty a company is willing and able to handle. One consideration often undervalued is the internal expertise and commitment needed to successfully manage operations outside of the United States. 

There are a variety of strategic approaches service organizations can adopt. Can you give a few examples?

We encourage service organizations to become informed of a new market by attending conferences and industry gatherings. Use contacts made there to schedule visits and follow up on discussions about collaboration. Move into a strategic alliance where you share work and resources without investing equity.  Then, after evaluating your success in those efforts, consider a greenfield office, acquisition, or joint venture. Diligence, discipline, and constant review are required when you’re a service organization that’s heavily dependent on mobile talent, unlike a high capital industry with stable assets. 

Any final words for service organizations developing or revising their international strategies?

Is developing a strategy that reaches beyond borders a significant undertaking? Sure. But it's a necessary one. A deliberate, well planned, and well executed strategy—even if that strategy focuses on international awareness—is important to position companies for sustainable future growth. Get an outside review of your internal work. Be open and ready for a critical look at the assumptions and considerations your internal team developed. This is the time to welcome criticism versus looking for blank acceptance.