In previous blog posts, we discussed some of the challenges and opportunities that often face U.S. companies that are considering doing business abroad.
Here are some examples that we are familiar with and that can illuminate the complex decision-making process that these companies can encounter.
First, a West Coast contractor was experienced in working with federal infrastructure and excavation projects throughout the United States mainland, as well as on U.S. military installations in Hawaii, Alaska, in islands in the North and South Pacific, and on U.S. installations in the Middle East. For this company, the decision to search for international projects was an easy one. The management team was accustomed to working in challenging locations and was not troubled by operating projects at a distance or by having to comply with new local laws. It already works for the U.S. Navy, the U.S. Army Corps of Engineers, and the U.S. Air Force, does it in accordance with U.S. laws and specifications and standards, and does it in some of the toughest weather and physical locations imaginable. Anywhere else it goes, and anyone else it works for, will be easier.
This company already has a relationship with its insurance company, its bonding company, and its tax advisors. It already performs a risk assessment before any new jobs and is accustomed to making decisions about whether to buy and ship its equipment or to lease it. It knows what kinds of projects it does best, and how to tell when there is profit in them, regardless of location.
For a second company, this one based in the Mid-Atlantic states, the decision to look to the global market had already been made. The bigger decision was, should it expand its existing operations in the Caribbean (previously confined to one country), or should it keep its operations localized? After examining its in-house structure, it determined that it had sufficient internal resources to maintain and even grow its operations in the United States and that it had adequate time and funds to task its U.S.-based team with developing a business strategy that works on two fronts: maintaining operations at home, to fund what it can, while simultaneously building operations and organizations in multiple Caribbean and Latin American markets.
For a third company, also based in the Mid-Atlantic region, the decision to go into the global market was harder. Management assessed the “negative” drivers — a shrinking domestic market. The decision-making team realized that the company’s resources included technical skills that were in demand outside the United States, a multi-lingual senior staff, and a support team that understood international financing and bonding. Management realized that these “positive” drivers were undervalued when the U.S. domestic economy had supplied more than enough work.
Now, in leaner times, these previously undervalued assets needed to be taken into consideration. After weighing the relative costs and benefits of staying local or going into new territories, the management team was able to identify opportunities that it considered sufficiently valuable to try, and simultaneously it identified for each the maximum investment it felt comfortable making. In other words, it set out the parameters for pursuit of new work, and then set to identifying opportunities that fit within those parameters.
