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Top 8 Global Risks Facing Canadian Companies Expansion Plans

November 16, 2016

Running a business inherently means that you inherit some risk; however, exporting brings with it more risk then a business owner may be used too. Magnolias works with clients to both manage and measure risk when evaluating operations outside of their main country of operation.

 

Risk levels are low in markets such as the United States and Europe; still, even in relatively safe markets, it is important to manage and measure risks as part of a business management system or standard business practices. 

 

Additionally, if you plan to enter a new overseas market, your preparations should always include a careful review of the types of risks that your business could face, and take steps to mitigate them. Magnolias uses a range of measurements and indexes to assess the overall risk of doing business in a particular market.

 

 

1. Cultural Differences

Cultural differences are the number one reason that companies fail when expanding internationally. This is backed up by countless high profile case studies. We will work to perform both customer and cultural market analysis, from the countries or regions in question, to help minimize cultural differences that may harm the overall expansion plan.


2. Economic Risks

The global market has become more volatile in recent years. Anything from exchange rates too changing free trade agreements effect how your expansion plans should be handled. Of course, tax rates are another consideration that must be measured.

 

Each industry sector and region have different volatility indexes that help us to estimate the risk of entering into a market. This examination will help to make priority based decisions of what steps should be taken and in what order to execute an expansion plan.

 

3. Employing Talented Individuals

Employment laws throughout the world are very different. Each country has unique nuances of what is required to hire an employee. We will help clients to understand the employment specifications and do market research on employment rates in particular regions, in an effort to help retain any hired talent.

 

As a result of demographic and competitive growth pressures talented employees are hard to find. It is our job to try make this process as easy for your business as possible.


4. Brand Management Risks

If an expansion plan to a new country for your product or service does not go as planned, it can do damage to your overall company brand in that region and globally. This is why it is important to put together the appropriate cultural, customer and pricing management plans to mitigate any risk that is associated with selling products to new customers.


5. Global Competition

It is no secret that global small business competition is becoming more and more pertinent when making business decisions. Often being first-to-market comes with branding and awareness benefits to a company, if done properly. This has caused may companies to try expand globally as soon as possible to either be first to market or simply keep up with the competition.

 

6. Regulatory, Legal and Contract Risk

Legal uncertainty, like nuance laws that are unpredictably applied in regions throughout the world must be considered when planning an expansion plan. Magnolias will connect with its network of international lawyers to provide information about the risk and consideration to make when moving to a particular region within your desired industry. 


7. Third-Party Liability

Third-party liability refers to injury, loss or damage caused to a third party as a result of your company’s operation. Carrying proper insurance for global operations is important; however, it is also important to put the proper company systems and procedures in place to protect quality, health and safety of employees, and prevent issues before they happen. If managed properly, company systems also provide due diligence and documentation to help aid legal proceedings if an incident does occur.


8. Civil Unrest and Political Violence

While this is not an issue in every country that your business may want to expand too, it is important to understand the political and civil status of countries within your plan, in addition too countries around these regions. Political system and cycle analysis is sometime warranted when entering a higher risk market.

 

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