Venturing abroad

This weeks' "Economist" has a lead story on the impact of mobile telephony in emerging markets. According to the aptly tiled "Mobile Marvels" story which appears in the special reports section " and discusses the growth of services around mobile devices,..."in rich countries most such services have revolved around trivial things like music downloads and mobile gaming. In poor countries data services such as mobile-phone based agricultural advice, health care and money transfer could provide enormous economic and developmental benefits." While my intention is not to turn this forum into a critic of the august publication, I would venture to demur that an industry such as the US Mobile gaming, which generated $566 million in revenue in 2006 can hardly be called trivial.

Nonetheless the lesson that I took from this article is the wide array of possibilities that stem from simplified communication. Different societies at different stages in their life cycles have taken the marvel of telephony and used them to generate enormous business opportunities worldwide. However it is obvious that should a successful gaming company in the US attempt to expand geographically, it may be well advised to understand the different societal dynamics at play that may make gaming an attractive business venture in the US and maybe not so attractive in an emerging market setting.

As the recession starts to slow down and companies get out of their survival mindset and start looking for opportunities to grow, they may be tempted to diversify geographically. DuPont's foray into the sub-Saharan region is probably a harbinger of things to come especially because companies like IBM that were highly diversified pre-bubble, seemed to withstand the latest down turn better. Thus corporate strategy teams in companies looking to expand geographically should be alive to the different societal dynamics at play. Companies, like individuals have a winning mindset. And whilst it is easy to be tempted to transfer a business model that already works, it is equally important to conduct sufficient due diligence to ensure that that model will also work in the foreign market. In short, ensuring that there is flexibility to take into account local dynamics can often spell the difference between a successful foreign expansion or total failure.