2001 Global Summit of Women

Hong Kong

Two ways of starting a business globally

Juliet Goodfriend
Chairman, Strategic Marketing Corporation/U.S.A.

(Excerpted from a speech given at the Global Summit of Women 2001 in Hong Kong on September 14, 2001.)

One way to get started is by using sub-contractors outside of the United States. There are advantages such as there are no start-up costs or legal hassles since you are using their structure. There are also no labor problems because they are dealing with the labor. Without exception, I would recommend that you start your global business by using local sub-contractors wherever you can.

There are also disadvantages to using sub-contractors. You are dependent on others. You do not have a larger employee pool. You lack depth locally and therefore you are not competitive. You lack credibility with your clients. Our clients who were very sophisticated knew that we weren’t really global. We just looked global. We could deliver a global product, but we couldn’t control it. Also, you generally have a lower profit margin when you sub-contract.

The alternative, or second phase, is truly going global -- that is registered, representative offices in the different countries you want to work in. There are serious disadvantages. There is tremendous red tape. There are very high start-up costs and extremely high social and labor costs. From the United States, we are not used to the labor laws that control labor in the European Union. There are political dangers, cultural conflicts, and serious currency problems as well.

However, there are advantages. You have real credibility with your clients. You have real local knowledge through experts on the ground. You also have a new labor pool and a tremendous amount of fun and pride when you visit your offices in other parts of the world.

My suggestion is to go gradually by sub-contracting. Later on, put people on the ground. Do it if your clients demand it and if you can manage it both economically and from the human resource perspective. Do it if it is something you are dying to do. Don’t do it if you think it will run you because it takes a tremendous amount of time from your main core business to go global.