The Mindset of Internationally Successful Companies.

September 23, 2015

 

Risk management for going global requires a delicate balance of detail-oriented preparation and openness to uncertainty.

Back in 2013, U.S.-based retailer Target had what many thought was a brilliant strategy for its first international expansion. By purchasing the leases of failing Canadian discount chain Zellers it could open more than 100 stores in the country within a matter of months.

The expansion plan seemed straightforward but it didn’t take long for things to unravel. The inherited urban locations turned out to be an awkward fit for Target’s middle-class brand positioning, while the company’s hasty expansion left key supply chain issues unsolved, causing too many shelves to sit empty.

By the time Target pulled out of Canada two years later, the venture had incurred approximately $2 billion in net losses and left nearly 18,000 people unemployed.

Cross-border deals are an increasingly popular choice for growth-seeking companies, but failure rates remain high and the fallout can be catastrophic. As the Target example illustrates, even the most successful firms are not immune; just ask eBay, Starbucks, and UK supermarket giant Tesco. Poor preparation, inflexible mindsets and over-reliance on historical tried and proven formulas all too often thwart internationalisation efforts.

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