For the past several centuries, companies wishing to do business internationally were faced with two major problems: distance and time. Fortunately, with the emergence of virtually instantaneous communication methods, including telephones, computers, videoconferences and mobile communications devices, and the ability to be in almost any other part of the world within 24 hours, distance and time are no longer major concerns for operating on a global playing field. In fact, today all businesses, from start‑up firms to large mature companies, must operate and compete in a rapidly changing international environment that includes both opportunities and challenges. For example, firms cannot afford to pass up foreign markets that can offer supplies, technology, low cost manufacturing, human resources and, most importantly, potential customers for their goods and services. However, going global is not always easy and firms can expect stiff competition from local companies with access to emerging capital and credit markets. In addition, foreign countries are joining together to form regional trading systems and US companies must invest time and effort in understanding these systems in order to successfully penetrate markets in these countries. Many foreign governments are also aggressively supporting their own industries and firms through comprehensive industrial policies. Finally, each new market has its own unique requirements with respect to product characteristics and distribution. As a result, US firms must develop the capability to differentiate existing products to meet the needs of foreign markets and must understand the distribution channels in those markets.
Companies, both large and small, consider “going global” for a variety of different reasons. Some of the more tangible benefits include opportunities to reduce costs and risks, secure additional access to necessary supplies, improve customer service and relations and, of course, gain access to new markets for the company’s goods and services. For example, for most companies, one of the primary reasons for establishing a facility or function in a foreign market is to take advantage of perceived opportunities to reduce the costs of operations and production. As for risk reduction, this will hopefully occur through diversification of the company’s market opportunities that comes from tapping into the interests of foreign customers.
Companies may also look at global operations as a way to learn about new ways to improve operations throughout the company and to gain access to attract talented managers, engineers and scientists from foreign countries who can make a contribution to the entire organization. For example, a US company seeking to decrease the costs associated with its manufacturing activities can partner with firms in foreign countries that specialize in “lean” production techniques. This allows the company to immediately lower its production costs and gain access to know-how and technology that can be deployed in the US and in other foreign countries. In addition, companies are establishing offices and research centers in foreign countries to expand their knowledge network and improve the quality and breadth of their core competencies. For example, a company can literally globalize its innovation processes by establishing multiple R&D laboratories around the world and connecting scientists and engineers from different countries through networks that allow them to collaborate on continuous development of new technologies and product concepts.
Since almost all of your clients will eventually globalize their activities, even if just in a small way, it is essential for you to see your role as a global business counselor and to take steps to familiarize yourself with the methods that your clients will use to “going global” and the legal issues they are likely to encounter. This month we have added two valuable training tools to Business Transactions Solution on WESTLAW to help make you a better global business counselor. A slide deck presentation on Globalization (§259:164) can be used for law firm and department training purposes and all of the basics are covered in a new Business Counselor’s Guide to Globalization (§259:165).
Want to learn even more? Sign up for the webinar on “Why Your Clients Must (and How They Can) Go Global” being presented by West Legal Ed Center and the Business Counselor Institute on Tuesday, November 22nd at 11:00 AM Central Time. Follow this link for registration information. It’s the first of a four part series on Going Global to help you be better prepared for client questions on growing their businesses in foreign countries. More materials relating to the subject matter of the post can be found here.
A version of this post originally appeared Thomson Reuters’ Legal Solutions Blog and all of Alan Gutterman’s posts on that blog can be accessed here.