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Going from local to national and subsequently international is a matter of scaling—albeit with a geographical nuance to it. For example, if you are operating in the National Capital Region (NCR) of Delhi and have a product which you want to replicate at the national level, you first need to find the areas which can be addressed. If the business has become successful in the NCR region, you can look at the demographic profile of the customer base. You should find some place which has a similar or better profile for demand to emerge for your product.

This also has a cultural angle to it and you need to map your chances of success by the demand for your product or service.

Local touches
There is, however, a catch to this concept. In every likelihood the profile which is similar to the area of operation maybe another metro city where real estate will not come cheap. Mumbai, for example, will be a costly proposition to expand after operating in NCR. In this case, though Mumbai may appear number one in your profiling, you should look at other parameters of business like real estate availability, human resource availability, raw materials and others.

“To go from local to national, you need to address several important parameters. First, you need individuals who are capable of leading new offices and locations and it is important that these individuals are familiar with the values with which business has been conducted at the local location. You then need robust and established processes and principals and policies that will be followed consistently across all the locations. Every business has some core values with which the business has been successfully built and it is important that these core values are imbibed at all locations,” says Vikram Utamsingh, Head of Markets, KPMG.

Go national first
What one should not forget is that everything that is relevant in the geography you currently operate in may not be the same elsewhere. India is as global as you can get, as we have very different cultures across the country. Even the regulatory environment at the state levels can be very different. A very good way to test your product and your ability to adapt is to go national and then think of going global. However, if an opportunity provides itself to go global, one does not necessarily have to expand nationally.

Sea of differences
To go international, promoters of SME businesses must be prepared to let go and get in professional management who have international experience. To go international also means taking on significant risk and so, for an SME, it would make sense to expand slowly by doing a small acquisition and then stabilizing this operation before expanding further internationally, says Utamsingh.

Entrepreneurs will have to be wary about the regulations in a specific country. Standards, specifications, quality requirements, labor laws, time zone and IPR may vary significantly. One may also need to change the product to suit a country’s requirement and invest significantly in brand building. It always helps to have some local insights into the country where you plan to expand.

©Entrepreneur May 2010

Tags:
global, local, national, scaling