In today’s corporate world, competition and market share are no longer confined to just one country. As a result, many U.S. companies are eyeing globalization as the key to profitable growth. A vast talent pool, more customers, and enhanced production are just a few of the promises of international expansion and, inevitably, such prospects are accompanied by endless questions.
In September 2015 the Philadelphia CFO Leadership Council kicked off its first event of the season with a presentation on Globalization: A CFO’s Guide. Focusing on the best pathways to take in preparing your organization for international markets, our panelists highlighted their own experiences, along with the lessons that they learned from establishing operations in new countries.
Our Speakers Included:
International Laws and Regulations Need To Be A High Priority
In addition to stressing compliance with FCPA enforcement, it was noted that many countries, such as China, Brazil, and the UK, have implemented strict anti bribery laws in the last few years, which pose even greater concerns internationally. Regulations now go beyond those established by the FCPA and it is important to fully understand all of your liabilities.
In considering the risks and costs of doing business globally, every country presents different challenges and it is important to comprehend how each one operates. To help comply with international regulations, panelists recommended the following:
- Utilize auditors to monitor operations.
- Hire consultants to investigate overseas vendors.
- Establish and ensure that employees sign codes of conduct.
- Offer sufficient employee training in international operations.
Use Expats As Needed
Expats can be the key to business success, but, there is a price to pay for them, both financially and resource-wise. Based on the experiences of our panelists, disadvantages of expats have included language barriers, cultural acclamation, and overall relocation and adjustment to new surroundings. Established overseas corporate units can successfully tap into their local employee talent pools, however, it was stated that, depending on the country, finding the right fit and skill sets can be challenging and compromises must sometimes be made. Expats tend to be a safe, reliable choice for newly expanding organizations.
Evaluate Countries Carefully
Words of advice from our panelists: Do your homework and establish consulate contacts. If you merge with another company internationally, make sure that you understand how it operates within a global context. Take into consideration the complexities of tax planning, tariffs, manufacturing, data privacy laws, shareholder rights, and the process of moving money from one entity to another. Familiarize yourself with political risk insurance and disregard any countries that do not have a sound legal system. Poor choices can transform your company into a money pit.
Global Operations: Making It All Worthwhile
Managing assets and pulling everyone together on one central system is a constant balancing act. But, overall, it is important to let the global markets be part of the entrepreneurial spirit. Take the time to figure out what’s right for your organization’s international expansion plans and, as our panelists warned, don’t attempt the “ready, fire, aim” approach.
For more information on this subject, check out the following:
- International Transfer Pricing: Is the Tax Man about to Knock on your Door?
- Global CFO Resources: International Transfer Pricing, French VAT Law, and more!
- The Hidden Costs of Global Employment
For questions or more information, contact us today.