Gaining Strategic Confidence
Having a global footprint provides many strategic benefits like access to new customer markets, new suppliers, and new partnerships. Despite of the benefits these expansion comes with its own strategic challenges. Many foreign companies find it increasingly difficult to be locally acceptable and adaptable. The major roadblock that keeps companies from entering APAC market is developing a strategy for the increasing diversity of the market, customers, and channels and successfully implementing it. Very few international companies are able to effectively understand the operating environment and customer needs.
All global companies believe that the vast reserves of skill, knowledge, and experience within the global workforce are an invaluable asset for their company. However, managing these assets is a difficult task. Another challenge often faced by the companies are finding, deploying and developing new talent in emerging markets. Majority of their workforce is trained and tailored according to international markets. It is a tough job to adapt them to the ideologies for emerging markets.
Scale and complexity costs
As companies grow larger they enjoy the economic leverage of being able to invest in shared resources from R&D to procurement. But expansion also leads to an inevitable rise in diverse complexity costs. Standardizing common elements of essential functions such as sales or legal services can clash with local needs. Emerging markets usually complicate this as the cost of operations of having multiple, central and regional centers increases with the size of the market.
Risk of diversification and loss of familiarity
A geographically diverse business portfolio provides a natural hedge against the volatility of local growth, country risk and currency risk. But pursuing many emerging market opportunities also takes the company into areas with unfamiliar risks that might not be easy to identify and tackle.