ONE OF THE TRICKIEST growth challenges multinational companies face is to replicate domestic business success in overseas markets. Even companies that plan carefully and enter favorable markets with growing economies can see their market entry initiatives fall short.
With this challenge in mind, four researchers have developed an assessment to help managers avoid international expansion pitfalls. The researchers include Douglas Quackenbos, adjunct professor at the University of South Carolina’s Moore School of Business in Columbia; Richard Ettenson, professor of global marketing and brand strategy at Thunderbird School of Global Management, a unit of Arizona State University, based in Glendale; Martin S. Roth, dean and professor of management and marketing at the University of Hartford’s Barney School of Business in Connecticut; and Seigyoung Auh, associate professor of marketing at Thunderbird.
The researchers based their assessment tool on a survey of 301 global business practitioners whose firms were active in foreign market entry.
Based on their scores in seven categories (see sidebar below), the 301 firms were classified into one of four groups according to their chances of achieving foreign market success: “Do Not Pursue,” “Danger Zone,” “Proceed with Caution,” and “Full Steam Ahead.”
Ninety-two percent of the 76 firms in the “Do Not Pursue” category and 69 percent of the 77 firms in the “Danger Zone” category had experienced unsuccessful international expansions. On the other hand, 76 percent of the 59 companies in the “Proceed with Caution” group and 92 percent of the 89 companies in the “Full Steam Ahead” group had seen their initiatives succeed. These findings suggest that the assessment tool can help business leaders predict whether their firms are poised to succeed overseas or whether they should avoid international forays altogether.
“Does Your Company Have What It Takes to Go Global?” appeared in April in Harvard Business Review. Find the article at https://hbr.org/2016/04/does-your-company-have-what-it-takes-to-go-global.