Many offshore projects are gripped by a gold-rush mentality, but the true cost-benefit implications of a foreign initiative are difficult to gauge, and the associated risks make it less attractive for smaller companies. A basic portfolio management approach can help in building the business case to go (or deciding not to go). Here are some important questions to consider.
“It is our true policy to steer clear of entangling alliances with any portion of the foreign world.” — President George Washington, Farewell Address, 1797
On a recent business trip to the Far East, President Washington’s comment on foreign entanglements came to mind repeatedly following a series of formal and informal meetings with U.S. and Western European business representatives on the difficulties of small- and medium-sized companies in establishing and maintaining a viable commercial presence abroad. In many cases, those representatives were struggling with the notion that the basic business cases for their various foreign operations and investments were fundamentally flawed by inadequate risk analysis and overly optimistic return on investment calculations. The question confronting many of these companies, even those experiencing some degree of success abroad, is quite simply, “Is this really worth it?” And increasingly it appears for many companies the