How They Fail When Expanding

We have seen many direct selling companies that had been quite successful at their home countries failed in other markets. Stepping into the international arena is not an easy task. This difficulty is not something that is seen only in the direct selling industry, on the other hand. The famous US discount retailer Target’s first international move into Canada turned out to be a nightmare for this company. Even this case alone shows many of the failures can be avoided with prudence.

A direct seller’s each withdrawal from a country might have its own reasons behind. That said, there are some general areas of failure:

Wrong Partner

In many of the cases, direct selling companies wishing to expand internationally choose to do so with a local partner. And again, most of time this is not through a joint venture, but through granting an exclusive distributorship in a certain market. Although this might reduce financial risks, it surely brings very high business risks if the local partner pick is not right. Unfortunately, direct selling companies never cease to surprise me by being misled by locals who present themselves as the kings or queens of the MLM world!

Wrong Local Management

In fact, this is an area of failure similar to the above. This is because again, the mess here is due to not having done the groundwork properly. A field leader who has successfully built a solid network organization does not necessarily mean s/he will run your operation out there as successfully. I have also seen cases where the main reason for choosing that specific manager was because the person was fluent in the language of the HQ!

Wrong Ex-Pat Management

Are you sure the person that you will leave the company abroad has had enough international exposure? Is the next person at the HQ who is dying to be re-located to an exotic place the right choice? Does that person have enough understanding of what s/he is about to face in terms of the legal environment, the business ethics, and the cultural climate, to name a few?

Ignoring Cultural Differences

I have seen many mistakes made here, too. Yes, globalization is a strong trend and billions of people are being exposed to loads of information through the Internet now. But none of these gives the luxury of ignoring cultural differences. On the contrary, what always pays back is respecting and complying with them, especially in a people business such as direct selling.

Leaving It to International Leaders

Leaving opening a country to international leaders who would fly from other markets is another tricky area. If not well-monitored, the whole launch can easily turn into a disaster. On top of the realized business risks, the company may very well find itself in trouble with the local authorities.

Lack of Physical Presence

While some markets can easily be managed from one central location, it is literally not possible to succeed that way in others. Even if there are no legal requirements imposing a physical presence, this is so because some societies are more skeptic than the others. Individuals in such markets just have a need to build confidence in that company before and also after they join. And physically being there plays a very important role here.

Lack of Proper Supervision

The last but not least is the supervision and guidance from the home office. This is vital, period! Some direct selling companies lose thire initial interest in those markets if they see they have not been growing well enough. Instead of trying to look into the problems deeper, they might easily turn their attention and management time to other new markets. Well, this only speeds up the downfall in that problem-market.

Expanding into a new country is not an easy task as some tend to think, but absolutely not as difficult as some feel, too. It is only a matter of doing all the necessary homework well enough.




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