The choice of the right geographic and economic location was and remains one of the most significant strategy factors of leading industries in their internationalization process. But medium-sized enterprises also face uncertainties prior to making a decision on the choice of location – whether at home or abroad.

Location decisions are not solely based on in-house framework conditions; external factors that significantly affect the process are key.

Financial aspects, for example, play a role, such as comparing the salary rate of employees at various geographical locations, or even their level of professional qualification.

Relocation to a foreign country isn’t always the best decision to take, even when, on the surface, cost comparisons may suggest this.

It makes sense especially for small and medium-sized businesses to broaden the selection process and consider the soft economic factors that often get pushed farther into the background.

Two main factors in this context are:

• To consider during the site selection process: Include the entire environment surrounding the new economic location and the new market. These involve not only conventional market data, competition and cost structures, but how potential customers and clients in the new market will respond. Linked to this we have to consider an appropriate market entry strategy to address new customer groups.
• Consider your present company culture: It is hard to undo a location decision once it has been made. Frequently in the aftermath of a selection process, it has been determined that the new location and/or expansion led to changes, a „cultural fracture“ if you will. This can have a profoundly negative effect on management, labor relations and the cooperation between all parties involved in the former location.

You are going to plan an international expansion or offshoring project? What´s your look at upcoming site selection processes? If your search process is forthcoming, simply get in touch with us.

Image © Bernd Röcken