Thursday, October 30, 2008

Investing and dumping.

One of the tragedies of the recent economic downturn is the way investors are withdrawing from entire countries. Hungary is the latest in a line of Eastern European countries to fall into crisis because investors are pulling out. The twin problems are the opportunism of the lender and uncontrolled expenditure by the borrower. This attitude has been lionized in the West for decades - hence the enormous credit card debt, and we should not be surprised at its internationalization.

The shame is that this crisis is in my view unnecessary. Investing partnerships with planned spend and return limits would significantly have mitigated the situation. Investors would not have then pushed themselves to the edge of their capability, and spenders would more quickly realize return, stability and growth.

When it comes to international expansion it’s easy to fall into the trap of dreaming big without fully realizing how much energy and resources growing dreams eat up. There’s nothing more discouraging than a flash in the pan, when short-lived euphoria gives way to sadness and demise.

I believe the current situation should be a wake-up call for us to partner internationally in a controlled growth model. Exceptional marketing can lead to great exposure in a new market, but if, for example, supply chains are not up to demand that publicity will quickly turn negative. On the other hand, well-planned holistic approaches will enjoy long-term growth. Then we’ll really be able to celebrate.

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