Global enterprises are is more accessible than ever before, so it’s not surprising that more companies are developing overseas strategies as ways of driving business improvement. Economic conditions at home are such that ironically, in several businesses I’m involved with, it’s cheaper in some cases to ship product to the far-east for processing then back again, than it is to process in the UK. Many parts of Eastern Europe, Asia and the Far East for varying reasons offer commercial advantage to a variety of sectors.

The debate among global economists rages on about the sustainability of the “advantage” but my belief is that the benefits will be there for many years to come. Evaluating the likely advantage in the context of pay-back on capital expenditure projects is a useful exercise.
Overseas labour costs, easier access to raw materials and reductions in cost structure present opportunities for real business growth, however, operating overseas does have challenges and needs to be approached with caution.

Consider some of the challenges in operating a home-based business, then imagine doing the same thing several thousand miles away; add in the time difference, language and communication difficulties, cultural issues and differences in operational and technical standards to name but a few of the practical issues. Moral and ethical issues, such as exploitation and child labour, also exist so care must be taken to ensure these aspects have been properly researched.

Apart from the practical challenges, operating overseas can add enormous strain to cash flow as partners often require transactions through letters of credit, and coupled with the transit times involved, management of cash can be challenging. It’s crucial not to underestimate the potential strain on working capital and be careful not to over-stretch.

All that being said, it can be an exciting opportunity with high rewards and shouldn’t be ignored. Achieving success requires a clear understanding of the risks, processes and a structured plan.
Business is all about people and this, I believe, applies more than anywhere to overseas ventures of any kind. Enforcing legal contracts abroad will be expensive, if not well nigh impossible, therefore engaging with the right people, both in the UK to help establish the relationships, and on the ground in your chosen territory is vital. Trusted partners in who you have confidence and who have the experience to navigate you through the process are crucial.

Finding the right country of operation and the correct partners are challenging and critical decisions and require careful research and selection. The use of qualified and experienced UK partners is undoubtedly the best way to minimise risk; so connect with the right networks and establish the best partnerships.

Having found the right partnerships, a combination of ex-pats and locals on the ground in the area of operation is vital. Overcoming communication and cultural challenges and ensuring that operating standards and procedures are adhered to are all more easily managed if you can achieve this. Utilising ex-pats is invaluable as a way of building confidence with your partners and it gives you much better control. Monitoring and controlling operations can be difficult several thousand miles away. Simple reporting and communication all gets more complicated when distance and time differences along with cultural and language barriers come into play.

However, don’t be put off by the challenges but consider the opportunities. All of these issues are manageable and for many businesses it is highly successful; it’s simply about understanding the risks, engaging the right people and good planning. Moving the performance needle is becoming more difficult year-on-year therefore out of the box, bigger picture thinking becomes increasingly necessary. To survive, never mind succeed, demands more time at the telescope and less at the microscope.

Andy Stapley established Bigger Picture Solutions after more than 20 years’ experience in the food industry, almost 10 of those in various board positions within food companies. Specialising in business strategy, and particularly overseas development and outsourcing, he successfully established a number of overseas ventures mainly in south-east Asia and China.

Copyright 2008 Plato’s People Ltd

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