Monday, 18 june 2018 | Redacción CEU
Sometimes it is necessary to take a step back so you can take two steps forward. We are used to talking about the virtues and advantages of business internationalization, but we know that in this type of expeditions entrepreneurs also take risks. On some occasions, these immersions in new markets do not achieve the expected results or meet the expectations. It is something that most entrepreneurs avoid considering, but it is also a point that deserves reflection when someone decides to bet on an adventure of this magnitude. What happens if the project does not reach a good conclusion? When is the bet on a new territory lost? Can you leave a market abroad with your head held high? To what extent can the failure of the arrival abroad lead to the decline of the business?
It is important to understand the reasons why a project abroad might fail to stay afloat. This analysis will help us to appreciate whether it might prove profitable to try to save it by offering a different approach. It may be advisable to extend the time margins to give it a new opportunity. It might be vital to redefine the goals. Or whether time has definitely come to consider saying the final goodbye. Putting an end to an adventure like this is not a simple decision that can be taken lightly. However, when the projects have been carefully designed and planned, this resolution is much simpler to adopt. It also less likely to occur.
On the other hand, if we have erred in this point -the planning-, a withdrawal on time can become an intelligent bet. Many companies have managed to reverse a setback, a bad decision or an unfavorable situation, and turn failure into a business opportunity. Even some companies have taken advantage of some of their most famous mistakes or some of them have even turned failure into their strategy. Entrepreneurs are often wrong, the difference will be marked by their ability to learn from failures.
When a company decides to launch itself into a new market there are many variables that must be taken into account to properly identify whether the project guarantees the success. Even so, some of them may be difficult to predict. This is the case, for example, of an unprecedented meteorological catastrophe or an unexpected legislative change that affects our business. However, when making the decision to land in a foreign market, it is essential to analyze the different opportunities, threats, weaknesses and strengths, carry out a detailed study of the target market and, of course, proceed with an appropriate risk-management policy.
Uncertainty is a variable which is linked to any project. Although this is an impossible equation to solve in an complete way, it is possible to reduce it to a minimum. When considering an initiative abroad, it is important to take into account the risks inherent to our sector, but also the most frequent causes of the failure of a project abroad:
If these risk factors have been taken into account, it is more difficult for the presence of the company abroad to come to an end. However, when a project is not following the planned course, it is important to understand what the reasons behind the unfulfillment of expectations really are. A detailed analysis of these small triggers will help us to find out if it is possible to redirect the course or if the damage has already reached an irreversible point.
Many companies divide their export efforts in different countries with the hope of compensating the benefits of the most adverse territories with those from the most receptive markets. When the time comes, it can be very difficult to make the decision of withdrawing from a territory that has not presented good figures for some time. The entrepreneurial spirit is usually tenacious and resists to give battles for losses. In these cases, investment budgets and sales goals will be useful. They are the ones that set the limits to a project's investment and also the acceptable minimums to continue in a market.
In the case of companies that have opted for internationalization as a process and face a context that is sufficiently unfavorable to consider the option of retiring, it is important to understand that this lack of success does not have to imply the decline of the company. In brave bets, such as investing abroad, entrepreneurs risk losing more. They also acquire a truly valuable experience when it comes to carrying on with their business career. This can be key when starting a new project, why not, also abroad. This is the reward of knowing how to say goodbye, and being able to use and learn from our failures in the beginning.
At The CEU IAM Business School, we have designed an EMBA that will provide you with the skills, knowledge and tools necessary to face the challenges of a complex and changing business environment. A training that will help you to make complex decisions successfully.