Expanding internationally can be an incredibly attractive strategic option, enabling businesses to achieve faster growth compared to what might be achieved if a business remains in their home market.
To achieve that growth careful planning and consideration of the trade-offs and challenges is required. When we talk to companies about their international expansion plans, we always look at their overarching strategy and encourage them to look at the key trade-offs that can impact the success of their strategy.
International success requires better analysis of the trade-offs in selecting markets
When a business considers its international expansion strategy it will often look at some of the trade-offs it will need to make in order to execute its strategy. What we often see is a business limiting the trade-offs and characteristics of a country market it reviews which can have a detrimental impact.
Image 1 below illustrates how we typically summarise these trade-offs and how they are weighed up. Ideally, you want a big circle in the top left corner – indicating big profit (circle size), high production quality (vertical axis) and low geopolitical risk (horizontal axis).
Take, for example, an Indian life sciences company that we recently supported. They initially wanted to compare production costs and quality across several locations. We encouraged them to expand their assessment to consider the ultimate shareholder returns, their ability to execute the strategy, and the geopolitical risk across the markets they were considering entering. When using the model below with this client they were surprised to see that the lower cost markets generated lower after-tax returns to shareholders. Conversely, some of their target markets had a less than favourable assessment as they came out with less flexible employment practises and higher risk, owing to cultural and legal factors.
Image 1: trade-off decisions to consider when expanding globally
At Gateley Global we compare hundreds of countries and many industrial sub-sectors for clients to help inform their international expansion decisions. Comparisons can include detailed analysis on employment costs, property costs, taxation, business regulation, compliance, geopolitical risk and much more.
Backing Britain: Brexit hasn’t had a significant impact…yet
The top reasons that overseas companies want to come to the UK are usually to access the skills and knowledge base and – despite Brexit – to access the EU and global markets. The economy, culture and language follow closely behind. So far the threat of Brexit has had little effect on those reasons, as the UK continues to be an attractive investment location and is consistently in the top 10 countries for ease of doing business. It remains the 5th largest economy in the world, a world-leading financial centre, and continues to be the number one destination in Europe for foreign direct investment (FDI).
At Gateley Global we have seen only a small number of companies put their plans on hold while they wait to see what happens post-Brexit. Larger companies appear to be more equipped to read and interpret the Government’s guidance and plan for a no-deal scenario – should that be the outcome. There are also, of course, many smaller companies that are not as concerned about Brexit – especially some of those in the tech sector that don’t feel bound by national borders anyway.
Helping clients achieve international success
At Gateley Global we work with start-ups through to Fortune 500 companies to provide insights into their international expansion strategies. Since we were founded in 2013, we have helped more than 900 businesses expand internationally. This includes helping both UK businesses to expand overseas and foreign businesses to enter the UK market.
The Gateley Global team spend time visiting clients and contacts across the world, helping to ensure they have the market analysis and access that they need to execute a successful expansion plan.
Get in touch with the Gateley Global team
Please contact a member of the Gateley Global team to find out more about how they can support your clients with global expansion plans.