7 Main Reasons Behind Failures in International Markets

There are many direct selling companies that are successful at home but are not doing so well in other markets. Each of these cases obviously has its own reasons. However, we can pinpoint those specific areas where the deadliest mistakes are made. This article covers seven of them.

Partner Selection

In some cases, direct selling companies wishing to expand internationally choose to do so through partnering with a local entrepreneur. Most of the time this is not by forming a joint venture, but through granting an exclusive distributorship in a certain country. Although this might reduce the financial risks, it brings very high business risks if the chosen local partner is not the right one. Unfortunately, direct selling companies are still misled by the locals who present themselves as the kings or queens of network marketing. This is merely due to poor background checks.

Local Manager Hire

Actually, this is an area of failure that is similar to the above. Because again, the failure here is due to not doing the homework properly. A local field leader who has so far built a sizable network organization in that market does not necessarily mean s/he will run your operations successfully. Requirements at a managerial corporate role is very different than those of the field’s.

Appointment of an Expat

Are you sure the person you will leave the company abroad to has had enough international exposure in his/her life before? Is that next person at the HQ who is dying to be re-located to an exotic, warm place the right choice? Does that individual have adequate understanding of what s/he is about to face in terms of the legal environment, the business ethics, and the cultural climate, to name only a few? You might want to read Jeff Dahl’s insightful article on this together with examples from his own personal experiences.

Cultural Differences

I have witnessed so many wrong moves made in this field, too. Yes, globalization is a strong trend. And yes, billions of people are being exposed to tons of global information on the Internet now. Yet, making business in a foreign culture can be quite different. A company from abroad does not have the luxury of ignoring those cultural differences. On the contrary, what always pays back is respecting and complying with them. Direct selling is truly a people business, to remind.

Leaving It to International Leaders

Allowing the international field leaders to open a new market is another tricky area. If not well-monitored, the whole launch project and the weeks of hard work behind it, can easily turn into a disaster. Alongside all the business risks involved, the company may very well find itself in troubles with the local authorities due to various compliance issues. We have seen numerous examples to this.

Physical Presence

While some markets can easily be managed from one central location, it is literally not possible to succeed by doing so in many others. Thus, knowing the difference is crucial. Even if there may no legal requirements imposing a physical presence, 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.

Ongoing Supervision

Finally, we have the supervision (and also, guidance) by the HQ. This is vital, period! Some of the companies turn their managerial focus to the next potential market as soon as a country has been opened. Some others lose interest in markets where they think they are not growing well enough and start spending less time on these. This is so dangerous. It only speeds up the downfall in that country, negatively impacting the international sales leaders who have expectations from that market.

Expanding into a new market is not an easy task as some tend to think, but it is absolutely not as difficult as some may visualize it either. It is only a matter of doing the necessary homework well.

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Hakki Ozmorali is the Founder of WDS Consultancy, a management consulting and online publishing firm in Canada, specialized in providing services to direct selling firms. WDS Consultancy is the publisher of The World of Direct Selling, global industry’s leading weekly online publication since 2010. Hakki Ozmorali is an experienced professional with a strong background in direct sales. His work experiences in direct selling include Country and Regional Manager roles at various multinationals. You can contact Hakki here.

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