What do great international companies do? What makes them successful that you as an individual can copy for your own life? Quite a lot, it turns out.
Finding Opportunities Abroad
I am currently working with a local Austin company on a live case for one of my classes, Global Marketing, at the University of Texas. As part of the case, students will have to research the attractiveness of several countries from the perspective of a successful US online transportation platform provider. They will have to analyze the stability of a country, its political and economic system, cultural traits, currency fluctuations, and local regulations. Then the students need to match the local conditions with the minimum conditions our Austin firm has set for expanding into a new country.
The analytical process above is exactly what you would use to analyze which city or country might be best for you to live in. You look at the various macro- and microeconomic criteria to determine whether the city of your dream will live up to what you want.
Selecting Partners Abroad
Often, when companies enter a new country, they don’t do it alone. They create a strategic alliance or form an equity joint-venture. In a strategic alliance, each partner contributes a certain skill or product or distribution savvy that the other lacks; together, both then pursue their goals and share the proceeds. In joint ventures, both partners establish a new company to advance both companies’ goals. Both sides put capital in the new company and staff it, so the newly-formed entity has its own life.
Looking for a strategic alliance abroad is akin to searching for a foreign spouse. You might want to find somebody with complementary skills, looks, ideas, and background to have a great life together. Moreover, the formation of a joint venture is not much different from having a baby with said spouse. You own it jointly and both do everything possible to make it grow and prosper; at one point, your joint venture will prosper on her own. As with corporate alliances, a private international hookup comes with its own benefits and risks that need to be managed.
Global Procurement
The car you drive was probably produced in multiple sites across the world. The metal frame might have come from South Korea, the doors from Canada, the engine from Germany, and workers in Alabama finally put your shiny car together. This is a testament to global procurement (getting resources from all over the globe) and producing where the conditions are the best.
If you think about your education as procurement and your job as production, you can again copy the optimization strategies of a multi-national company. Study where cost and quality are better than at home. For example, if you want to complete an MBA program, going to Canada might save you 40% compared to the US on foreign exchange advantage alone. Alternatively, in going to Europe or Asia you will find programs that are more international, shorter, and available for a fraction of the costs of those in the US. Yes, their quality is comparable; take a peek at the last Financial Times rankings.
Best Location for Production
Where do you produce, i.e., work? You ideally offer your services where your output is cherished the most. This means that infrastructure for doing your job is available, you have a competitive advantage, and can make good money. Just as companies keep costs down, so can you – by working in countries/states with great benefits, low living costs, low taxes, and opportunities to grow your production capacity. You might be better off starting your career in Singapore than in New York, or a start-up in Lisbon instead of San Francisco.
Minimizing Taxation Globally
Perhaps you have read about the slightly unethical game large Silicon Valley companies are playing in Europe. They set up multiple subsidiaries, move intellectual capital, costs, and revenues around, then arbitrage different tax systems. They basically pay close to nothing in taxes. All the while, a local pizza place in the Netherlands or a medium-sized, family-owned enterprise in France faces taxes of 30% or higher it cannot escape.
Depending on your passport, global tax optimization might or might not work for you. But you can optimize your taxes sequentially and in a legal and ethically correct fashion. Think about it this way: The more money you earn and can save in the early years of your career, the more your savings will compound over decades. That is why you should consider starting your career where either tax is low or savings are tax-advantaged. In the US, 401K plans and IRAs are fantastic savings vehicles. If you work in a high-tax country like Germany, you might need to stay 5 years to have access to tax-advantaged corporate pension plans. Taking a hard look at the intersection of take-home pay, taxes, and taxes on savings will go a long way.
Thinking and Acting as a Global Player
Once a company has reached a certain size and is present in multiple locations, being global comes naturally. The company starts thinking as a global entity. Nobody minds hearing foreign accents on conference calls anymore. Moreover, HR has implemented programs for employees to gain experience on foreign soil. It is normal now for executive teams to be comprised of several nationalities. Global staffing runs on a “what is best for the company” strategy without preferring either home or foreign workers.
For you, having a global mindset might be the beginning of your journey to leverage the world, or it might come as a consequence. Either way, once you see all the opportunities, you will abandon any home-country bias. As such, you will search for and grab opportunities wherever they might arise.
Takeaway
Think of yourself as a one-person international company. Observe and learn from what the “big guys” are doing. Then use their strategies and tactics for your own life by asking, “How can I globalize my life to achieve a higher degree of success and happiness?” Don’t be afraid to experiment until you find what works best for you.
© 2019 Michael Froehls – All Rights Reserved
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