When expanding into foreign markets, businesses must carefully consider their mode of entry. Oftentimes, finding a partner in a new market can ease the transition and mitigate some of the risks involved with international expansion. A joint venture can bring deep familiarity with the market and make the expansion more successful. At the same time, companies must carefully consider the possible partners and implications of a partnership before signing any agreement. A partnership comes with its own risks, making comprehensive due diligence for potential partners a priority.
International expansion involves a number of barriers, from language and culture to legal and regulatory obligations. Partners familiar with the market prove an invaluable tool during this process. At the same time, unethical partners can take advantage of this lack of familiarity. Companies should carefully consider the ability to navigate cultural and regulatory boundaries without assistance and weigh the other potential benefits of a partnership prior to the expansion.
If a company does decide to engage a partner, executives should carefully scrutinize the agreement to ensure proper protections prior to signing. An international business lawyer can offer further insight on how to best structure the deal.