Keeping connected a first-year priority

After setting up their overseas offices, all the companies we studied integrated a reporting structure in some form or other into their organisations. For 72% of the respondents, their foreign-based colleagues report directly to the CEO or managing director at the headquarters. In most cases, the CEO requires constant updates on operational issues such as the progress made by R&D staff or sales targets.

Only two China-based companies in our sample have dedicated managers in charge of the progress of the foreign operations. The rest of respondents reported not having the resources or the manpower for such a dedicated role. Not surprisingly, the companies that had sent a current employee overseas tended to rely heavily on informal communication because of the familiarity with working styles and established trust.

For those who insisted on constant communication, the ubiquity of fax and e-mail met almost all their needs. A handful of respondents (from technology companies) used Voice over Internet Protocol (VoIP) and web conferencing tools. Nearly a quarter (24%) of the companies had put company-wide networks in place to facilitate information sharing.

Some 82% of the managers felt that communication between the two offices was definitely effective, while only 11% felt that there was little valuable interaction.

It's interesting to note that most of the companies adopted a mix of formal budget reporting and progress updates, including revenue targets that had to be discussed every quarter.

Some 17% of respondents chose instead to give their executives some autonomy in allocating resources. Despite the availability of modern communications, about 89% of senior managers interviewed reported travelling to the foreign facility at least once every six months to monitor progress first hand and to attend important sales meetings. In fact, only one of the companies in our sample had never visited its foreign facility.

When the managers were asked to analyse their first 90 days of operations, about 41% of respondents agreed that building the local team topped their list of priorities. They also said that cementing local contacts and starting to target the right customers were essential elements.

When rating these elements, most respondents thought they performed very well in these areas. There were some areas, however, that managers considered had plenty of room for improvement. One-tenth of managers thought that they were sorely lacking in the ability to expand their customer base and leverage on their new facility.

One India-based company said it had picked a completely wrong location and was regretting picking a low-cost venue. Another reported that, in retrospect, it had entered the foreign market without completing adequate groundwork regarding potential partners and competitors.

Despite these setbacks, a comfortable 54% were "definitely satisfied" with the results produced by their foreign facilities during its first year.To date, 83% of the managers say that progress has continued, so much so that almost half the companies interviewed have set up another foreign facility.

Furthermore, 85% said that the lessons learned from their first foreign facility were of great help (69% of managers were completely convinced that this was the case).

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