Tip: Complete Extensive Due Diligence When Expanding Abroad - Modern Distribution Management

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Tip: Complete Extensive Due Diligence When Expanding Abroad

Understanding local business practices is critical to maximize international opportunities.
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When expanding internationally, it is crucial to complete extensive due diligence of the market, especially the area's workforce and business model, says Barry Lawrence, director of the industrial distribution program at Texas A&M University, in Destination: Mexico.

It is necessary to understand not only the local "labor laws, import-export procedures and tax policies," but also how businesses in that area conduct the sales cycle, he says.

In Mexico, for example, tapping into the knowledge of the local salesforce can help a company understand it takes up to "five times as long to get anything moving, but once it gets moving it’s much easier to sustain and it can hit higher volume levels because trust is the all important factor in Mexico," says Lawrence.

Buyer loyalty and pricing are other factors that should be assessed when expanding because convincing customers to pay more for value-add services can be a challenge in a price-driven culture.

Companies must weigh security and safety in certain areas, as well. Political turmoil and crime are a major concern for distributors planning to expand, especially south of the U.S. border, but distributors who overcome these challenges can find numerous business opportunities.

Read more about international expansion in Destination: Mexico.

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