New country entry is integral to business expansion, however it comes with risk. In our ever-changing climate, it is vital to conduct thorough due diligence and identify all possible threats, from security to economic instability and international relations.
Common Failures of New Country Entry
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Cultural differences: in a new country, considerable efforts should be made to respect local customs, including language barriers and behavioural differences, which can affect business.
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Unforeseen costs: expenses such as tariffs, export fees and high tax rates can damage profit margins.
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Lack of planning: not doing sufficient research and due diligence to understand the target market and all risks associated with doing business there.
The In Amenas hostage crisis
The In Amenas hostage crisis in 2013 is a prominent example of failure to properly consider the risks of new country expansion. A four-day siege of the gas plant by a Salafi Jihadist terrorist cell linked to Al-Qaeda culminated in the deaths of 39 foreign nationals and 29 terrorists.
The resulting inquest found that the plant had inadequate security provisions and established the need to make security part of the company’s core business, project planning, and investment decision process. In addition, the attackers had insider knowledge of the plant, therefore emphasising the importance of cultural research and forging good relations with the local population.
Benefits of New Country Entry Reporting
New country due diligence can be broadly divided into six key areas for security assessment: political, economic, social, technical, legal, and environmental.
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Political: governance, relevant policies, international relations.
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Economic: regulatory controls, tax implications, bribery and corruption, ease of doing business.
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Social: migration, human rights, health, culture.
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Technical: infrastructure, cyber security, telecommunications, IT knowledge.
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Legal: the rule of law, crime, terrorism, protest activity.
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Environmental: Energy security, natural resources, land or fishing rights.
This applies to businesses operating in all sectors; however, many threats are magnified in the oil and gas sector. Often hydrocarbon resources are extracted from high-risk countries and may be subject to strict taxation policies on petroleum products, and targeted by environmental protestors, eco-terrorism, or sabotage. An in-depth country analysis report, identifying the key factors above enables organisations to make informed decisions and better understand the risks and the potential rewards from making a move into new territories, thus saving time, resource and above all, safeguards people and assets.
How can Inverroy help you?
Inverroy Crisis Management produces comprehensive new country entry reports, using qualitative and quantitative data. As a result, we can ensure that you are aware of the potential challenges when expanding business to a target country and help to mitigate those risks.
Inverroy also provides travel management plans and on-the-ground security to ensure your people stay safe.
To find out more, please contact Inverroy at enquiries@inverroy.com
Featured photo credit: T.H. Chia (Unsplash)
