Be smart with your global expansion

We work with many companies that are considering expansion into a new country for the first time, and a good first question to ask is always, “Is your company truly prepared to operate there?”

Logistically, we know we can help our clients relocate employees from point A to point B, no matter where those points are. But expanding into a new country is about more than simply moving people there. If a company isn’t ready for all the unique factors at work in a given location, the expansion isn’t likely to be successful.

Research from Wilson Perumal & Co. and published in the MIT Sloan Management Review provides a useful way of looking at this issue. Researchers ranked countries across the world in terms of “complexity,” looking at areas such as market sophistication and political stability. They then grouped countries into eight bands, with nations like the U.S., U.K., Australia, Germany and Japan making up Group 1 (the “MVPs”), or places with the least amount of operational complexity. At the other end of the scale, Group 8 (nicknamed “Only the Brave”) consists of countries with high complexity and plenty of operational challenges.

These rankings can then be used to think strategically about business expansion. For instance, if you’re a company with all of your operations in the U.S. (a Group 1 country) and you’re looking at expanding into India (a Group 6 country), you should be prepared for a very complex transition. In this scenario, it might be smart to tackle a move into Malaysia (Group 2) or possibly China (Group 3) first before taking on the complexity of India down the road.

Conversely, the rankings can also help companies that already operate globally consider new locations. If your company has been operating successfully in India for several years, it likely shows that you have the proper infrastructure and strategy in place to thrive in other Group 6 countries, such as Peru or South Africa.

Ultimately, the research lays out a roadmap for being smart and strategic when it comes to global expansion. Failing in a new location can have huge financial and reputational consequences, and failure can often be traced to a company’s inability to handle a country’s complexity. So, before we relocate a single employee, it’s wise to answer that first question: “Are you ready to operate here?”