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May 11

Due Diligence for International Business Expansion

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Expanding your business in order to accommodate the international market is such an exciting thought. It is much like the journey you embarked on when you first started as an entrepreneur – only this time, you have more funding, equity, and an established brand. In addition, the demand has grown to the point that you are considering global development.

Global expansion is a vital step that many businesses go through, and as such, there are a lot of key things you will have to do in order to make sure that the decision is a well-informed and sound one.

There are a lot of aspects to the due diligence you have to conduct. Let us discuss the most important ones here.

 

  1. Financial due diligence

Most of your expansion’s operational efficiencies will be determined by the company you are partnering with, in the country you are expanding to. Diligence International Group advises that businesses conduct proper financial due diligence in order to accurately assess whether they are what they are declaring themselves to be. Their assets, liabilities, and equity must all be accurately stated in their financial statements, in order for you to be able to evaluate that they are a suitable partner for you abroad. This may be a bit too tedious to do in house – it is better to have professionals take care of the investigation for you. Look for trusted businesses in the field to hire. Evaluate which ones will be able to provide the particular services that are most suited to your needs.

 

  1. Market assessment

Check for the viability of your offerings in the market that you are planning to expand into. You have to make sure you have objective evidence that indicates potential for robust profitability in this new territory.

 

  1. Competitor analysis

Have a firm grasp of competitor performance and their brand equity. How much hold do the current offerings have on the market, and will you be able to penetrate efficiently enough to get returns on the initial investments placed on your expansion efforts? These and other questions are vital in the evaluation of your business move.

 

  1. Cultural due diligence

Conventions you are used to in your native country may not be what works in the foreign country you plan to expand to. Make sure that their customs and traditions allow for the seamless acceptance of your product and service into the market.

This could be applicable in a number of ways. One example would be how their religion could impact acceptance of certain food offerings, or ingredients that are part of your manufacturing. Another would be if the language barrier and communication culture will not be a hindrance to your correspondences, be it with your product packaging or with the professionals that will be assigned to manage your business in the foreign country.

 

  1. Regulatory and tax requirements

Make sure to follow all the local laws and tax requirements in order to ensure that you do not run into trouble. Make sure that even with all the local laws and tax requirements that you will still be efficient, and will be able to maintain a solid bottom line.

These are just a few of the primary things that have to be assessed before expanding your business into a foreign territory. Though it may be a meticulous process to undergo, conducting thorough due diligence is the wisest step to take, especially in big decisions such as this one.

 

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