Hiring a local team or managing expansion from the head office

When entering a new market, a company must decide who will run the international business: head office staff or a local team.

The first option is management from the head office.

At the early stage, this helps cut costs and keep uniform management standards. Finance, strategy, product development and marketing stay centralized, while sales can be tested through local partners.

This approach is especially convenient for startups that are still testing demand and are not ready to invest in a full-fledged foreign division.

The second option is a local team.

As sales grow, the company needs people who understand the local language, culture, laws and the specifics of negotiating.

For example, the investment firm Andreessen Horowitz opened an office in Seoul to grow its presence in Asia and attract local talent. This allowed it to build relationships with regional partners and better understand the specifics of the market.

The third option is a hybrid model.

Harvard Business School researchers Christopher Bartlett and Sumantra Ghoshal identify three key tasks of an international company: global efficiency, adaptation to local markets and knowledge sharing between divisions.

In practice, this means the head office keeps control over strategy, finance and brand standards, while the local team independently handles sales, customer service and product adaptation.

Which model should you choose?

If the company is only testing the market, start by managing from the head office. As sales grow, hire local specialists. When the business becomes sustainable, build a full-fledged foreign division.

The key principle: don't create an expensive local structure too early, but don't try to run a large international business solely from the head office either.

Sources:

1. Harvard Business School — Christopher Bartlett, Sumantra Ghoshal, What Is a Global Manager? (1992).
2. Andreessen Horowitz — The Company of the Future is Default Global.
3. Andreessen Horowitz — the case of expanding into Asia and opening an office in Seoul.
4. ICONIQ — International Expansion Playbook.