RETAIL EXPANSION
BACK TO CONTENTS Contractual agreements
As well as this due diligence, companies need to think about embedding certain risk management tools into the contractual relationship. For example, giving yourself audit rights over the partner so that you can look properly at their cashfl ows and revenue streams. A less formal requirement may be that you ask that the partner’s staff go through the same anti-corruption training as your own staff.
Historically, some of these things have been nice to haves. But, increasingly, they are becoming must haves. Whatever risk management processes you’ve got in place, if you’re expanding overseas you’re going to need to step them up.
Boots on the ground
It’s also important to take a hands-on approach. You need to have a presence in the country. Many of the problem cases I have encountered are where clients haven’t been suffi ciently hands-on, particularly in joint ventures where the venture is effectively run by the local partner. You need to have your own people there, involved in the management decisions. That can be diffi cult in some countries and some relationships, but this too is no longer a nice to have.
Finally, your risk management framework needs to be able to cope with the fact that you may have several different models simultaneously – a joint venture in China, a franchise arrangement in Brazil, an online arrangement in Germany. A joint venture is going to bring different risks to a franchise arrangement. A partnership in Spain carries different risks to one in Nigeria. Your framework needs to be broad enough and robust enough to handle all the permutations.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
Sean McGill Associate Director, Strategy Group
T: +44 (0) 20 7694 1578
sean.mcgill@
kpmg.co.uk
Sean is an Associate Director in KPMG’s Strategy Group where he works with clients to identify growth opportunities as well as tackle illicit trade in products. Sean focuses on providing support to consumer goods and retail clients. He has seven years experience with KPMG in both the UK and North America.
Josh Mandel Senior Manager, Forensic
T: +44 (0) 20 7311 3778
josh.mandel@
kpmg.co.uk
Josh is a Senior Manager in KPMG’s Risk Consulting practice where he works in the Forensic Investigations and Compliance team. He has been advising clients in a range of sectors on cross- border investigations, anti-bribery and corruption and third party due diligence for nine years, and previously worked for six years as an emerging markets political risk analyst.
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