This is the fifth installment in a series on Mistakes Countries Make and How They Can Get It Right.
With all the research resources available around the world, foreign companies and business sectors still can make two mistakes about the U.S. regarding its size. The first mistake is misunderstanding or under appreciating the distances from market to market. The best way to say it is that it takes about the same time to fly from New York to Los Angeles as it does to go from New York to London. That’s been said many times but until you have to set up meetings on opposite coasts on a frequent basis, the wear and tear on personnel and resources doesn’t really sink in. Enough said about that. It’s a big country. We all know that but market planning from abroad needs to look at the practical daily impact of the America’s size.
The second mistake is to think that one needs to cover the entire country or most major metropolitan areas at once. Of course, it depends on what industry companies are in but the size of individual state and region economies is larger than that of many countries. A number of people have illustrated this with maps showing the GDP of states as equivalent to countries.
For example, the map below shows the economy of California as equivalent to that of France, Canada to Texas, Brazil to New York.
Another version shows Brazil as Texas, New York as Russia and California as Italy.
Still another, has compared California into Russia, Texas to India and New York to Mexico.
Obviously, the year in which the comparison is made is going to make a difference and one can draw these maps in different versions over and over. But the point hits home when you’re a small company in a foreign country that each state of the U.S. represents a major market and opportunity. If a foreign producer is asked if they can muster up the resources to sell their product in a country such as Denmark, they may say yes without hesitation. But if asked to focus their efforts on the state of Washington, they’ll quickly say they want to go to Oregon and California too. That could require the resources equivalent to blanketing Denmark, Malaysia and Italy at the same time.
Proximity of states makes a difference but is not that much different than selling in three neighboring countries. For many products, state laws can also make a difference. For example, we have 50 different sets of laws governing alcoholic beverage sales. The nature of the sector also has an impact but does it really make sense for a foreign IT company to think of Silicon Valley, New York’s Silicon Alley, North Carolina’s Research Triangle, and the tech centers around Austin, Seattle and Boston at the same time? It happens.
Part of our job at Futureshift is to guide clients to the geographical areas that enable them to focus their resources to attain the best possible return on investment. It’s less about the map than it is your capabilities and where there are market needs but the point of market size often is not well appreciated or understood.
Tags: Americans, Assumptions, Countries, Customers, Due Diligence, futureshift, GDP, Governments, Situation Analysis, States, Strategy, Trade Associations, U.S. Marketplace
