Distance Still Matters
www.hbrreprints.org
TOOL KIT
Companies routinely exaggerate the attractiveness of foreign markets, and that can lead to expensive mistakes. Here’s a more rational approach to evaluating global opportunities. Distance Still Matters
The Hard Reality of Global Expansion by Pankaj Ghemawat
•
Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Distance Still Matters: The Hard Reality of Global Expansion
12 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
Reprint R0108K
TOOL KIT
Distance Still Matters
The Hard Reality of Global Expansion
The Idea in Brief
The Idea in Practice
Why did U.S. media giant Star TV lose
$500 million trying to deliver TV programming to Asia? Like many companies, it was so dazzled by the foreign market’s immensity that it ignored the difficulties of pioneering new territories. For example, it assumed—wrongly—that Asian viewers wanted English-language programming.
How to decide whether to expand into a particular foreign country? Consider distance’s four dimensions—and ask how they might affect your industry. The table provides examples.
How to avoid this fate—and select the right targets for your firm’s global expansion? Look beyond a country’s sales potential (as expressed by national wealth or propensity to consume)—and analyze the probable impact of distance.
COPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
But don’t focus only on distance’s geographical dimension. Consider three other dimensions as well: cultural factors (religion, race, social norms, language); administrative factors (colony-colonizer links, currencies, trading arrangements); and economic factors (income, distribution-channel quality).
The more two countries differ across these
TOOL KIT
Companies routinely exaggerate the attractiveness of foreign markets, and that can lead to expensive mistakes. Here’s a more rational approach to evaluating global opportunities. Distance Still Matters
The Hard Reality of Global Expansion by Pankaj Ghemawat
•
Included with this full-text Harvard Business Review article:
1 Article Summary
The Idea in Brief—the core idea
The Idea in Practice—putting the idea to work
2 Distance Still Matters: The Hard Reality of Global Expansion
12 Further Reading
A list of related materials, with annotations to guide further exploration of the article’s ideas and applications
Reprint R0108K
TOOL KIT
Distance Still Matters
The Hard Reality of Global Expansion
The Idea in Brief
The Idea in Practice
Why did U.S. media giant Star TV lose
$500 million trying to deliver TV programming to Asia? Like many companies, it was so dazzled by the foreign market’s immensity that it ignored the difficulties of pioneering new territories. For example, it assumed—wrongly—that Asian viewers wanted English-language programming.
How to decide whether to expand into a particular foreign country? Consider distance’s four dimensions—and ask how they might affect your industry. The table provides examples.
How to avoid this fate—and select the right targets for your firm’s global expansion? Look beyond a country’s sales potential (as expressed by national wealth or propensity to consume)—and analyze the probable impact of distance.
COPYRIGHT © 2004 HARVARD BUSINESS SCHOOL PUBLISHING CORPORATION. ALL RIGHTS RESERVED.
But don’t focus only on distance’s geographical dimension. Consider three other dimensions as well: cultural factors (religion, race, social norms, language); administrative factors (colony-colonizer links, currencies, trading arrangements); and economic factors (income, distribution-channel quality).
The more two countries differ across these