In the midst of the current economic turmoil, it's not surprising that company boardrooms around the world are operating under the "Cash is King" mantra. But the need to conserve resources and operate to maximum efficiency shouldn't mean we close our eyes to opportunities to ­expand and grow.

It might sound counter-intuitive for a company faced with having to rationalize its operations in its core geographic markets to start thinking about expanding and setting up base in newer geographies. But while the mature economies of the world are suffering, the emerging geographies are holding their own and in many cases are seeing growth. While many developing countries have experienced a sharp economic fall throughout the current crisis, with GDP contractions of 10 to 30 %, it is also true that these economies are recovering much quicker than the more mature economies. The Indian economy for example has been witnessing a phenomenal growth since the last decade. After seeing a growth rate in excess of 9 % for the last three years, it is still holding its ground in the midst of the current global financial crisis. China is another good example. After a first quarter with slow GDP growth (by Chinese standards) of 6.1 %, analysts are predicting annual growth of around 8 % for the year as a whole.

An active presence in countries like India, Vietnam and the Middle East will help sustain the bottom line while we navigate through the recession. But more importantly, a geographic development strategy can sow the seeds of further growth once the recovery begins - even if the economic experts are not exactly sure when that will happen.

It's certainly been Dow Corning's experience that a clear strategy of expanding beyond a home market and entering new geographic markets can reap significant awards. In fact it's been one of the key ways in which we've grown the business since we opened our first manufacturing site and commercial center in North America more than 60 years ago. Today, we operate 26 manufacturing plants in North and South America, Europe and Asia, and we sell products in nearly all countries. More than half of our sales come from outside the U.S.. We are continuing to reach into new markets and establish new footholds- many of them in Central and Eastern Europe but also in the ASEAN region - countries that are only now beginning to see the potential of these materials to help their businesses to develop. Most ­recently we strengthened our operations in Poland and added to local bases created in Turkey and Russia within the last few years. All of these countries are ones where usage of silicone materials and technologies is at a relatively low base and thus represent a significant market growth opportunity for us.

What we've learned over the decades is that successful geographic market expansion takes time; it takes a clear ­vision and a strategy. Just as importantly it takes commitment and a real understanding of the risks involved - and how to navigate them. It also requires recognition that once you are in a country, you'll need to be agile enough to deal with the good times and the not so good. You may be going into a country where power black-outs happen regularly, putting severe pressure on keeping the supply chains running. You may find yourself trying to do business in the midst of international conflict or even internal conflict such as we've seen in recent months in Thailand. You may find your operations disrupted by major health scares - the current swine flu outbreak is bringing back memories for those of us trying to keep the business running during the SARS virus of 2003 which hit parts of Asia.

Failed and loss-making geographic expansions are littered with examples of talented, energetic people starting from scratch in a new location, to abandon the project with few leads and no sales six months later. In fact a recent McKinsey study suggests that for every successful market entry, four fail. While there is no single answer on how to deal with all these issues - no magic formula that will guarantee success, there are some key principles that can really make a difference when deciding to enter a new and emerging geography for the first time. 

Principle 1: It's All About Preparation

The key to success lies in the work you do before you make your decision to open an office or set up manufacturing in a new country. But don't just go over GDP charts; or levels of disposable income or population growth statistics and the myriad of economic indicators available. They're important signs of the income generating potential of a country and you do need to know them but you also need to look at the political stability of the country; the incidence of corruption; the attitude of government to business and to intellectual property rights. It is also important to validate your secondary research - for example on GDP figures, ­export/import data - with primary research on the ground, in order to make sure that there is a genuine market for your products. Secondary research alone can sometimes be misleading. Although global brands abound, don't make the mistake of thinking all countries are the same and you can apply exactly the same approaches from one country to the next. To do so can jeopardize your entry by alienating or failing to engage customers. Recognise though that there is only so much information you can get from analysts reports; there's no substitute for getting the insight first hand. That's why it makes sense to begin with a location where you already have knowledge, experience and contacts.

That's typically the model that Dow Corning uses - we will start small; sending sales representatives into the country first to service specific customers - often existing multinational companies with whom we are working in other countries. The local knowledge and insight we gain from the people on the ground is invaluable. Then we'll scale up its involvement in new emerging markets over time through a phased process.

Principle 2: Develop a Strong Channel Strategy

Early on in a new market, the ability to rely on a strong local partner can make all the difference in navigating around the local challenges. For some companies it makes sense to do this from the start, but Dow Corning prefers to wait until we have a sound enough knowledge of the local market so we know what we need and who can best serve us. We chose distributors who can bring us insight into local laws, regulations, decision makers and market dynamics. We will match our channel strategy to the market life cycle so as this matures we'll look to expand the relationship with the distributor where they take on broader responsibilities. As our business grows, we'll open a representation office that will manage our activities in the country, working closely with our global business units. This is the model we've used everywhere from Vietnam to Russia and it works so well, we plan to keep using it. It is essential to understand that, even though you should rely on a good channel strategy, nothing can ­replace having your own people on the ground talking to your customers.

Principle 3: Be Committed to Making it Work

Commitment is about three things. First, it's about focusing on one country or region at a time, and making it successful before moving on to the next. Each new location you add will take up serious management time, so multiple additional locations can just be a distraction. Second, take active steps to connect the local operations with your global business. Making sure the local operations use the same business processes as all your locations makes sense from an efficiency perspective but it's also critical for your customer satisfaction. Often when we go into a new country Dow Corning will be working with a company that we are already doing business with elsewhere in the world. We want them to have the same experience whichever location they work with. At the same time you'll need to be on the alert to cultural practices and business practices in that particular country, where the global standard just won't work. So some flexibility is essential. Third, don't dabble in markets. In other words, don't start up an operation in a country unless you are sure it's the right thing to do. You can seriously damage your reputation by appearing to blow hot and cold or, even worse, exiting the country leaving behind a trail of broken promises and unfulfilled expectations. Finally, do make sure that you appoint really good people, people that you trust, in charge of the operations in the country.

In summary, if managed properly, geographic expansion can help reduce costs, gain ­access to new markets and talent pools, and perhaps most
importantly, provide a robust pipeline to fuel future growth. But it starts with a clear vision of what you want to achieve and a determination to stay the course and to maintain that focus even when times may be difficult.