Drawing on his experience from senior leadership positions with Corning, Amec, Aecom, KDC and Decom North Sea, in this article Genoa Black Associate Consultant, Nigel Jenkins, outlines the value of having a detailed international strategy before you enter new markets.
Most companies approaching internationalisation can perhaps be generously described as overly optimistic in their own and their products appeal and how they might be successful in new markets without proper consideration. The following are the key details that are often overlooked by these businesses when they are expanding internationally.
Your international strategy needs to be based on a clear why.
I advise lots of companies considering, or expanding, internationally. I always ask: “Why do you want to do that?”
This question is often answered by many with “it’s a huge opportunity” or “the local market is stagnant”, who then go straight to the ‘what’ and the ‘how’ of internationalising a business without really getting to the bottom of ’why’.
What I rarely hear is: “our product is world leading”, “we’ve got protected IP”, “our product will bring value to local people” or “we’ve established key relationships”. The starting place for any international strategy needs to be a clear and specific ‘why’ linked to why going international will be successful for you.
Your international strategy needs supported by a well resourced SMART action plan.
After the ‘why’ has been established you need a SMART (Specific, Measurable, Achievable, Realistic, Timebound) action plan, an essential for turning your growth ambition into a business reality. This plan then needs properly resourced, a stage many businesses don’t think through in enough detail, however. Resource planning should cover all aspects of the business such as finance, legal, commercial, technical, operations and marketing, and come with ownership and buy in from all employees from the board down.
Your international strategy needs to consider your International Customer Value Proposition.
Within the detail of an International Strategy, you also need an intimate understanding of how you will create value for potential clients, commonly referred to as your International Customer Value Proposition. An International Customer Value Proposition ensures your business and brand offering relevantly and successfully connects with the target audience in each specific region, given its needs, drivers and culture. Marketing your products and services with the same benefits, messages and marketing around the globe is often seen as cost effective and easy, whilst providing helpful continuity and familiarity to your domestic business. Make no mistake, this approach is extremely dangerous, can ruin your company’s reputation and limit your growth potential. A successful business, marketing approach and sometimes brand in one country, does not necessarily guarantee success overseas. Avoid this mistake.
A PEST (Political, Economic, Social, Technological) analysis of the macro environment of the target region is always helpful in conjunction with a micro analysis of the market that clarifies issues such as local legislation, practices, and taxes for example. Much of this should be done before you even step into a new territory. Using resources like Scottish Development International (SDI) and the UK Government Department for International Trade (DIT) can be enormously helpful too.
Accession Countries Case Study:
One of my most interesting ‘going international’ experiences was setting up a business to serve the oil and gas industry in Hungary, Romania and Bulgaria in the mid-2000s. In developing this international strategy we followed the above road map. The “why” was based on our success in other regions, shareholder commitment, and already established key relationships. We undertook a desktop Macro and Micro PEST analysis and accompanied UK Trade & Investment (UKTI) [as was] on a couple of trade missions, this helped us understand our Customer Value Proposition for the region. Once we had the intelligence needed, we created a SMART action plan with full investment and resourcing through to first order and time allowed to generate positive cash flow, amongst other things. We created a local Joint Venture, recruited locally and established an office. Then it was time to deliver on our international strategy through investigating our pipeline of opportunities, win planning, selling and converting. In total it took two years and significant investment and focus, but the long term recurring revenues secured great cash flow and profitability that was originally forecast in our initial international strategy.
Connect with Nigel Jenkins on LinkedIn.