“The past is a foreign country: they do things differently there.” So begins L. P. Hartley’s novel, The Go-Between. But according to PWC’s 14th Annual Global CEO survey, where 92 percent of Western European CEOs surveyed expect future growth to come from their Asian businesses, it looks like the exact opposite is true—the future is a foreign country, not the past.
Realizing profitable growth in parts of the world where business practices frequently differ from your own is not always easy. Not only do you cope with differences in time, geography, and culture, but you also need to juggle the challenges of running a multi-speed business that’s seeing growth in emerging markets far outstripping that at home. However, despite the challenges, these “foreign situations” can also present great opportunities for finance teams. To keep step with the growth and opportunities that global markets offer today and in the future, consider the following four points.
- Add overseas experience to your resume! What? Work abroad? Really? Yes, really. PWC’s survey suggests that many businesses are looking to double or triple revenue in emerging markets over the next five years so those in finance can expect there to be some great career opportunities in high-growth markets such as China, India, and parts of Latin America. By working abroad, you bring your local perspective and experience with you, benefiting the “foreign” organization you join. On the flip side, you’ll also glean an insider’s perspective and experience that you can bring back home. Those aspiring to achieve C-level positions in the future should take note that emerging markets experience in strategy or finances will be essential to the resume. With international experience under your belt, you’ll make yourself more marketable as a finance professional, and well versed in global business strategy.
- Beef up on the local territory In order to lower costs, finance teams must become familiar with the differences in tax laws, trade restrictions, and accounting standards since doing so means many queries can stay in-house rather than passed on to external consultants. Plus, you can significantly impact your ability to guide your organization’s strategy toward the growth already seen in foreign markets by learning the nuances of local market dynamics and business strategies as soon and as often as possible.
- Spend proportionately more time focusing on emerging businesses and investments Although start-ups in emerging markets may not generate significant revenues today, they are destined to become tomorrow’s cash cows. Invest time partnering with the local management team to understand how best to tailor products and services to address customer needs and bring the business into profit. Business operations in emerging markets will never be the most glamorous or have the biggest budgets, but they are the future—and somewhere where you can make a name for yourself.
- Look to technology to help you change quickly and scale Rolling out legacy systems to joint ventures and subsidiaries or filling gaps with standalone spreadsheets are both time-intensive and can end up being painful—especially when specialist skills are required (e.g., an Excel or IT expert) to tailor local requirements. A good alternative is taking into consideration some of the newer technologies, such as cloud services, that let you get up and running quickly, as well as allowing easy adaptation to many languages and currencies. Newer technologies can provide easy options for connecting data, people, and processes, and better adoption of best practices across all regions globally. Local users can also quickly tailor processes to accommodate local accounting practices, and regional and corporate finance teams still get all the information they need.
Bringing it home
The last two points are critical for success when expanding into emerging markets. Companies all too often end up using standalone spreadsheets for business planning and to fill gaps between systems and financial processes. This burdens the finance department with laborious manual processes just when it is imperative that the company becomes successful in a new market—which is exactly the challenge that global insurer Aviva averted with its rapidly growing subsidiaries in the Far East. Watch Darren Craddock, Director of Planning and Forecasting at Aviva, explain how they use Anaplan to spend less time generating an accurate forecast and more time engaging with local business units globally to optimize their end results.
This is the first of a short series of blogs exploring the topic of growth. Future articles will focus on the role of finance in growing businesses through acquisitions and increasing shares in existing markets.