Too often, companies fail when they try to expand internationally because they don’t fully understand the market, says Edward de Valle II.
Oftentimes, companies go global without first researching sustainability or their operations don’t cater to market needs, says de Valle, founder, president and CEO of AMG Worldwide.
Since the marketing company’s inception in 2002, de Valle’s knowledge of the global economy and his approach to expansion has strengthened the company as it’s grown, posting 2007 revenue of $62 million. AMG Worldwide has nearly two dozen offices and alliances across the world.
You can’t overlook putting in the time and research to do it right, de Valle says.
“I look at the general business climate — who is doing what, who has done well and, most of all, who has failed,” he says. “It is also important to look out for trending reports, where foreigners have done well or poorly in business in that country.”
Smart Business spoke with de Valle about where to begin when expanding your company into other countries.
Do the research to understand the feasibility of expansion. One of the things that I would recommend — and it worked in my case — is that I don’t just go to India and say, ‘I’m going to open an office in Bangalore, India.’
I research companies that are like mine, set up appointments, open a dialogue with those individuals. From that dialogue, I find out other opportunities that exist in that market.
You need on-the-ground intelligence. It is crucial. The CEO is not going to get the information from the paper.
A core example of what companies do wrong is, they all say, ‘Well, Brazil is doing really well, and so is Russia, and so is China and so is India.’ But they don’t follow the trends. They only look at the bright side.
They don’t look at the fact that when there is an economic recession, especially when it’s globally, the first countries to be affected are the emerging markets.
Now you might have a CEO who, because he only looked at the bright side, has invested $100 million in a new venture in Brazil without ever, ever, ever having studied, spoken to, been on the ground, worked with the local government to understand the economy and the fluctuations that it has.
The other part of it is speaking to other business leaders in those countries and taking the time to really do your due diligence. As the CEO of a company coming into a new market they might not be familiar with, I think it would be important to be able to do a SWOT (strengths, weaknesses, opportunities and threats) analysis.
I would like each individual that I come in contact with to explain to me what the strengths of their market are. I would like each of those individuals to express to me what the weaknesses are, what are the threats.
And then, I’d look at other individuals to give me the brighter side, which is the opportunities. Those four things are crucial.
I would not only rely on the sources I go to, I would also rely on government resources. You can even go into a U.S. embassy in Russia, for example, and ask them, ‘What experiences have other Americans had doing business in this country?’
Most people don’t take the time to do that. I would say it’s anywhere (from) six to 12 months before spending a dollar in a real infrastructure to do business.
