Press Release

IDC Report Press Release

23 September 2013

Demand for top-line growth is driving a new phase of international expansion, according to a new report Avoiding the pitfalls of international expansion.

The study, conducted by IDC and commissioned by TMF Group, a leading global provider of high-value business services, surveyed a number of senior level decision makers at global organisations and found that 86% of respondents were growing their footprint in order to expand sales operations. Nearly a third (30%) plan to enter new markets within the next 12 months and 64% within two years.

Europe was the region that businesses were most looking to grow their presence in with 25% of respondents citing this as their destination of choice for overseas expansion. This was followed by Asia Pacific and South America (both 23%) with the MENA region least favoured (14%).

These findings highlight a renewed confidence in global economic conditions and mark a significant shift away from cost-cutting priorities. Only 16% of respondents cited a demand to decrease operational costs as their primary motivation behind international expansion, echoing findings from IDC’s 2013 European Enterprise Survey which showed the priority of cost reduction fell to just 15% compared to 30% in 2009.

The survey also looked at the key challenges faced by businesses establishing operations in a new country. Finding the right premises and local suppliers were the most common difficulty businesses encountered with 42% of respondents citing this as a key issue, followed by complying with local rules, regulations and processes (36%), understanding local cultural differences and languages (28%) and finding the right local talent (22%).

Commenting on the findings, Hugo Van Vredenburch, Chief Executive Officer of TMF Group said: "Clearly we’re witnessing a sea change in the priorities of management teams as they shift away from conservative cost-cutting to a more proactive growth strategy aimed at driving sales and the top line of their business. Furthermore these strategies are being implemented at pace with nearly two thirds of respondents planning to expand their global footprint within the next two years.

"Businesses entering high-growth markets often face significant challenges, not only in terms of building functional relationships with regional partners, but also in meeting regulatory and employee obligations. Local expertise is crucial in solving these problems so it’s important businesses either do their research to develop in-house expertise or work with a trusted partner to address this."

A full version of the report is available to download.

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