Going Overseas To Do Business? Your Planning Must Be Different

Editor’s note: “International Business Corner” is a weekly column written by Joan Keston that provides information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.

This article is the second in a two part series that discusses the additional subjects and considerations that must be addressed when writing a business plan for international business.

RALEIGH, N.C. - When creating a business plan for international business, the basic components of a business plan are followed. In addition to these, when writing a business plan for developing countries, additional issues, challenges and considerations must be addressed and analyzed. Although many of these issues may be difficult to quantify and appear as if they are “soft” as opposed to “hard” data, they can reach the level of importance of being crucial to the successful implementation of your business strategy.

Qualifying Issues

Many qualifying issues must be considered or addressed, and a quantifying mechanism developed to assess the weight of those issues in your strategic analysis. Following are some of those issues:

• Developing Country Spectrum Analysis

Where is the country in its economic and political development? What is its recent past? Are there secure governing institutions?

• Issues that May Make Success Impossible

Is there political and economic stability? How involved is the government in the business environment? What is the attitude towards foreign direct investment?

• Time-line

Are you integrating the long-term investment of you venture with the short-term financial results your company may demand?

• Financial Investment

Are you committing the necessary funding for this project to foresee all possible impediments and demands for the long haul?

• Country Risk

What is the assessed risk of the country in terms of political, economic and social stability?

• Learning Costs, Training

How much training and coaching will your management, sales, marketing, operations and regulatory teams require? How much are the free market, capitalistic and democratic concepts a part of the business culture?

• Relationship Development Costs

The establishment and maintenance of relationships is vital to your venture, and should be developed before you even begin. What are the costs?

• Cost / Benefit Analysis

Various factors must be addressed in your cost/benefit analysis regarding how, where and with whom you will do business that are of significance in developing countries.

• Market Profile

Does your product or service fit into the cultural appetite as is? Do you need to make adjustments to your product or packaging? Are there competing products or services? Are there similar national products? Is there so much demand and so few consumer goods, that any product sells initially? How will long-term growth be sustained?

• Legal

Does Rule of Law and Due Process of law exist? Are there laws protecting Intellectual Property? Is there an independent judiciary? What is the corruption index? Are laws enforced? Are they equitably enforced?

Conclusion

Although many of the issues that will affect your business plan may be somewhat difficult to quantify in advance, they must be raised and analyzed and continually assessed and re-assessed as you proceed with the execution of your strategy. Their significance may be the ultimate cause of the failure or success of your international venture.

About the Author: Joan Keston is the Managing Principal of Keston & Associates, Ltd., an international business consulting firm located in Raleigh, NC, and a Partner at Paladin and Associates, Inc. She has 25 twenty-five years of experience with mature as well as entrepreneurial companies, domestically and internationally, coupled with an executive managerial and legal background. Her firm facilitates international business transactions, and assists companies establish, grow and integrate their international operations. She can be reached at (919) 881-7764 and jkeston@kestonassociates.com.