- New report identifies "softer" aspects of business expansions, such as sourcing new employees who support and enhance the brand’s existing culture, as a top concern
- Other findings include the desire to open new markets and gain market share as the main drivers for corporate expansions abroad
- A location's level of taxation or skills shortages do not seem to be as much of a concern to companies expanding overseas as might have been expected
A new report released today (December 3rd) by The Economist Intelligence Unit (EIU) states that bringing new people into a company's culture and values is among the biggest challenges during international expansions. Corporate overseas expansion: Opportunities and barriers, sponsored by TMF Group, builds on a survey of 155 senior executives who have knowledge of the issues involved in their company's expansion into foreign markets.
Among those interviewed for the report there was near-unanimous agreement that maintaining company culture while respecting local customs and cultural differences is a fundamental objective for a successful international expansion. By contrast, policymakers may have overstated the importance of a location's level of taxation, as this seems to be far less of a concern in companies' expansion projects than might have been expected.
The survey also finds that a desire to open new markets and gain market share are the principal drivers of corporate expansions abroad, selected by 59% and 57% of respondents respectively. This is especially the case for European countries, as sluggish growth in domestic markets has encouraged many European companies to seek stronger returns overseas. By contrast, the majority of respondents in Asia-Pacific (53%) are particularly driven by the need to find new sources of capital.
Martin Koehring, the editor of the report, said: “It’s clear from our report that once a company’s executive team has identified its scope for an overseas expansion, much of the success will rest on comprehensive planning. This includes 'softer' brand-authenticity elements, such as maintaining the company culture and values, that are in some regards more pressing—or perhaps more challenging to master—than 'harder' aspects such as currency hedging, integrating operational systems and ensuring compliance with local regulations.”
Read Corporate overseas expansion: Opportunities and barriers here
Press enquiries:
Mathew Hanratty, corporate communications manager
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Martin Koehring, senior editor
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Notes to editors
Corporate overseas expansion: Opportunities and barriers is an Economist Intelligence Unit (EIU) report, sponsored by TMF Group. It investigates the range of practical issues companies face when they start setting up operations in a foreign country and how they deal with those issues.
In August-September 2015 The EIU surveyed 155 senior executives who have some or very good knowledge of the issues involved in their company's expansion into foreign markets. Survey respondents included 33 chief financial officers, 31 chief operating officers, 31 general counsels or chief legal officers, 30 chief procurement officers and 30 heads of payroll or senior payroll professionals.
Geographically, 46 respondents were drawn from North America, 46 from Europe, 47 from Asia-Pacific and 16 from rest of the world. They represent a wide range of industries, including manufacturing (16% of respondents), IT and technology (16%), professional services (16%), financial services (11%), retailing (8%), transport, travel and tourism (6%), construction and real estate (5%), and energy and natural resources (5%). Of the companies included in the survey, 80 have an annual revenue of less than US$500m and 75 have an annual revenue of US$500m and above.
The EIU also conducted 11 in-depth interviews with senior executives. The insights from these interviews appear throughout the report.
About The Economist Intelligence Unit
The Economist Intelligence Unit (EIU) is the world leader in global business intelligence. It is the business-to-business arm of The Economist Group, which publishes The Economist newspaper. The EIU helps executives make better decisions by providing timely, reliable and impartial analysis on worldwide market trends and business strategies. More information can be found at www.eiu.com or www.twitter.com/theeiu.
About TMF Group
TMF Group is a leading global provider of high value business services to clients operating and investing internationally. It focuses on providing highly specialised and business-critical financial, legal and human resource administrative services that enable clients to operate their corporate structures, finance vehicles and investment funds in different geographical locations. TMF Group has operations in more than 80 countries across the Americas, Asia Pacific, Europe, the Middle East and Africa.
www.tmf-group.com
