The importance of leadership when expanding into international markets

With thanks to Luke Surridge for submitting this interesting blog for me to share for the benefit of business leaders reading with an interest in international expansion

For a business to become truly successful, it needs to expand into overseas markets. Although a domestic business can perform well and dominate the local markets, it is vital that businesses start to look overseas to guarantee future growth.

There are many good reasons to expand into international markets and this is not just about increasing a customer base. By moving into international markets, a business can take advantage of cheaper labour, resources that are more economical and cheaper rent. It also opens a business up to new suppliers and business service providers that may be able to offer better rates for common services such as administration and logistics.

However, not all entrepreneurs have the skills and experience to enable them to take their businesses into overseas markets. Although business leaders should push themselves out of their comfort zones to drive a business forward, many domestic business leaders are most confident in dealing with domestic business activity and prefer to leave the overseas operations to specialists who have already gained experience and knowledge in foreign markets.

Leadership is of utmost importance when expanding overseas, so every company with aspirations to make an impact on the international market should ensure that the director in charge of such duties is competent, highly skilled, respected and motivated to drive the business forward.

Major challenges

Today, businesses thinking about expanding into international markets can seek help from consultants and business leaders who often work on secondment with other businesses. Because of this, there are several places where a business can seek help when considering expanding into international markets. One company that specialises in such investments is AnaCap Financial Partners, a private equity firm that specialises in European private equity investments.

Investing overseas

Sometimes a business can take advantage of lucrative overseas markets by investing in other companies rather than moving their own business into these areas. This is not a common alternative to building international offices; however, it can be effective and risk averse.

Rather than investing in stock markets, some shrewd business executives invest in private equity overseas. This is a way to essentially invest in a single business, usually one in which business managers are very familiar, in such a way as to provide a return on investment while also supporting their own businesses.

For example, a retailer in the UK may sell designer shoes to wealthy individuals in London. They could open a shop in Paris or Rome in an attempt to expand their geographic market share, but this could be a very risky business plan. A better move might be to invest in the manufacturing of their designer shoes. By making an investment in the manufacturer’s business, the retailer is taking advantage of overseas opportunities while also ensuring that one of its suppliers is financially supported. This can lead to favourable prices on the supply side of the business and a good return on an investment.

Investing in overseas markets requires careful planning, due diligence and experience, and it is for this reason that it is usually best to contract such an important task to experts.

Written by Bob Bradley, founder of MD2MD

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