In market entry decisions, it’s critical to look beyond the “math equation” – sales potential may be great, but is it really the best, next opportunity? Distance can make a difference, and “distance” is more than geographic.

Pankaj Ghemewat, in his Harvard Business Review 2004 article Distance Still Matters, suggests a framework of evaluating markets that looks at “distance” through a number of lenses:

Geographic         (share a border, adequate transportation or communication systems, physical remoteness, climate differences, time zones)

Cultural                 (religion, race, social norms, language)

Administrative       (currency, trading arrangements)

Economic              (income, distribution/channel quality)

Where do you manufacture?

How do you manage customer service or working with vendors?

Does the distribution system support your product?

Will the buying criteria still be the same?

How about localization needs?

Is sharing a language more important than geographic proximity?

The answers to these questions may be different depending on your product, and where your company is in its lifecycle of international business.  Understanding what is most relevant, and acting on it, will be a key driver to your successful international expansion.

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