International Diversification - today's tale of two cities

Ed Marsh | Jul 18, 2012

Know where the business climate is going...not where you "hope it will"

international diversificationDid you see the recent LA Times article on the San Bernardino bankruptcy?  One chilling quote read "Some cities may not go into bankruptcy, but they may dissolve.  They may cease to exist."

Is that in your business plan?

I know, this isn't relevant to you:
  • your business isn't in CA
  • you don't sell to municipalities
  • your product has a solid niche following
  • your numbers are fine - sales are growing
  • this won't affect you
No doubt you're correct.  This won't affect you....until it does.  Here's the point - hope is not a strategy.  The market conditions in which your company was established have changed.  That doesn't mean you can't succeed or even thrive, but it does mean that you had best look realistically at the business world around you and adjust - and international diversification may offer the key.

"Skate to where the puck is going to be"

Hockey great Wayne Gretzky once identified the key to his prowess - his innate understanding of the flow of the game.  Rather than meet the opponent where the puck was, he moved to the spot where it would be - where he could leverage momentum unmolested.

Did he cede the rest of the ice?  Did he cower from direct confrontation or retreat from competition?  Of course not.  But he used his foresight and anticipation to create opportunities for himself and his team.

That is precisely the opportunity that international diversification offers your company.  Don't retreat from your domestic market - it's your home and where you built your business.  But if ongoing viability is important, start skating today to where the puck will be!

Go where the growth is

international diversification

Is "cease to exist" hyperbolic?  It may be - but that's not relevant.  Powerful trends are underway.  You can remain blissfully ignorant, or you can take the same bold entrepreneurial approach that you have taken to other challenges - meet this head-on and create an opportunity from the challenge.

So where would a bold approach take you?  International sales opportunities abound.  But the stunning contrast to the San Bernardino example can be seen in a recent McKinsey report on the growth of mega-metros and the growing global consumer class.

I've written about the opportunity of growing mega-metro markets before, but nothing so crystallizes the trend as the interactive tool McKinsey included with their report.

Key among their findings is:
  • "the emerging 440 (440 fastest growing cities in emerging markets) will account for close to half of overall growth
  • "the world's center of economic gravity" has shifted
  • "companies need to allocate resources proactively and aggressively to capture the opportunities"
  • consumer profiles will differ between metros and research and flexibility are critical to success

Understanding the opportunity

Let me reiterate - this isn't an "America is dying" screed, nor a call to abandon successful domestic business efforts.  Is San Bernardino atypical?  Sure.

It is, however, a realistic contrast between recent headlines which highlight trends of decay and stagnation vs. dynamic growth.  As a business owner your responsibility is to find opportunities which are consonant with your corporate philosophy and which will allow you to maintain a vibrant business to support your employees who value the jobs you have created.  International diversification offers an avenue to achieve this.

So while you strive to grow you domestic business, simultaneously explore the export potential which these dynamic markets offer, and how a spirit of entrepreneurship applied globally can boost your business.

Not sure where to start?  Intrigued but too busy with your domestic efforts?  Contact Consilium Global Business Advisors to discuss how we can support an international sales initiative.

Interested in how mega-metro population growth and demographics are important considerations in international diversification strategies?  Download our free eBook.

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