Like an individual organic entity, the rate of change is greater in a smaller organization, as it starts from a simpler and smaller base. And like living beings, it needs its enabling systems and infrastructure to keep pace with growth.

As an organization expands its operations to new geographical markets, several new factors come into play, such as different regulations, language and business practices, to name just a few. A system optimized for a single market may be utterly incapable of handling this greater scale of complexity. The incorporation of diverse operating conditions into the business model results in new challenges, some of which are described below.

• Compliance with diverse regulations--different countries have different accounting and statutory reporting requirements, which must all be met. Further, labor laws differing across countries and local practices on compensation, hiring, retrenchment and leave have to be complied with. In highly regulated industries, such as food, chemicals and pharmaceutical, compliance with local quality standards and documentation requirements is essential.

Cross-border transportation of raw material, components and finished goods is a different competency from handling local logistics.

• Planning, scheduling and forecasting--it is relatively easy to forecast demand and accordingly plan and schedule production when the domestic market is being served from a single plant and a few distribution centers. It is several orders of magnitude more complex to forecast and plan when multiple markets are being served out of multiple plants and distribution centers spread across countries.

• Transportation and logistics--cross-border transportation of raw material, components and finished goods is a different competency from handling local logistics. Intimate knowledge of local custom regulations for inbound and outbound cargo in different countries, knowledge of and relationships with logistics services providers and ability to handle financial and documentation side are important for success. Equally important, if not more, is the ability to keep tabs on movements of goods, so one can keep track of inventory in transit and its impact of production and fulfillment.

• Decision making--if there is one strength that SMBs have, it is their ability to take quick decisions as their organization structure is simpler. Usually the decision-maker has adequate visibility into all aspects of operations, and decisions are informed even when informal. However, as business expands into other geographies, they begin to lose touch with operations and large parts of business become opaque. They may continue to make decisions as in the past but with less insight and information. This can hurt the business significantly. The key is to retain flexibility and speed, but introduce more rigor in the process, basing decisions more on formally collected data.

• Cultural Fit--work practices, ethics and values differ across countries as a result of diverse political, economic and social history. This is hard to define, but could be a real inhibitor to success.

• IT Vendor management--SMBs have typically grown from ground up and have usually been serviced by neighborhood IT shops. However, as SMBs venture outside of their home market, they need to look at vendors that can support them in multiple markets or be willing to work collaboratively with vendors in other markets. Further, outsourcing may become important to cope with the increase in scale and complexity. Outsourcing requires higher level of vendor management competency.

Implications for software