by Becky DeStigter

As the world markets fret about the Euro crisis and a Chinese economic slowdown, international operational units are frequently under pressure to minimize a company's exposure to risk. Yet companies do not want to lose opportunities to increase sales in growing markets. What is an international company leader to do? 

 

A Balancing Act 

 

Since the days of sailing ships international business has been an inherently risky undertaking. Yet often international expansion can translate to exponential sales growth and a better competitive position in an industry. The trick is to balance any short-term risks with long-term expected rewards. Here are a few examples:

 

Chinese slowdown—China has been able to maintain extraordinary economic growth for more than a generation. The last time I visited Shanghai, it made me think of New York City's Times Square... on steroids. Slow growth in China (seven percent predicted) is still faster growth than the United States in high-growth year. And many specific markets are growing much faster still. Examples include any product or service related to education preparation, cars and beer.

 

Euro Crisis—Watching the Euro Crisis unfold has been like watching a train wreck in slow motion. But even in recessionary times, the Euro zone has some of the best infrastructure, education and worker productivity in the world. To avoid selling products in Europe is to discount what will arguably remain one of the top world markets for most products and services. Still, there are large variations by country and a wise European sales manager would allocate short-term resources to reach the Euro zone areas least affected by the crisis. 

 

Keep On Top of the News 

 

The geopolitics of every country are constantly changing. It is wise to stay on top of the latest developments in markets critical to your sales. A word of caution: Do not rely heavily on media sources from one country, including your own. Every country's media holds certain biases. Even in countries where the media is tightly controlled by the government, readers can learn from both what is written and what has clearly been omitted. 

 

Contingency Planning 

 

A common expression in American business is: "Hope for the best, but plan for the worst." This is always a smart approach in your international operations. While we cannot control the macroeconomic changes here or abroad, we can prepare for likely scenarios. Start by thinking of worst-case scenarios that actually could happen. Then brainstorm potential responses to each situation. You can skip over any situation that has a less than a one percent chance of happening (for example, nationalization of shoe production in the UK). Building a plan before you would ever need it allows you to keep a cool head when negative changes actually occur.

 

There is a positive side to geopolitical changes as well. Oftentimes uncertainty leads to new market opportunities. It would be wise to plan for these types of situations as well. In the case of the U.S., a decrease in the value of the U.S. dollar compared with other key currencies often means higher profits and increased market share. Are your production facilities prepared to handle the additional demand?

 

Regardless of whether changes are negative or positive, preparation will help your company make the most out of anticipated situations.