Expatriate managers need to be equipped with up-to-date business and technological knowledge. But to be successful in their assignments, they also need to acquire a sound knowledge of local conditions – they need to know what approaches and strategies will work in that particular overseas location. Many problems arise when they take important decisions that are based on false assumptions about local and regional markets.

When a company in West Africa which made construction equipment started operating at a loss, the expatriate general manager developed a strategy for dealing with the problem. This was to start making simple agricultural machinery from local components, so as to cut costs and expand the customer base. Subsequently, the general manager successfully sold his strategy to the board.

But making the new equipment turned out to be difficult because of long production delays – mainly caused by unreliable local suppliers. Within a few months, the company was doing only maintenance and clean-up work.