The Role of Partnerships in Global Expansion

There was a recurrent theme during the 2nd annual Global Symposium held on Sept. 10 by the Meadowlands Regional Chamber’s International Business Council: partnerships. Whether the discussion centered on services or products, the key success factor for any business looking to do business globally is the ability to select the right types of partnerships.

Both the keynote and panels that followed showcased a series of experiences to drive growth through new markets with themes ranging from growing a service company globally to global sourcing & distribution of well established global brands.  Industries represented included food, legal services, training, translation services, education, textile, genomics research and hobby tools.

The standard model of entering new global markets is to go into a country and sell to that country by setting up a branch to appeal to the local market.  By assessing the entire global climate, one can come up with innovative ways to capitalize on a potential country’s regulatory system and location to take an American product and provide it with mass appeal from around the world.  For a company interested in expanding overseas, it is often very helpful to look at what it does now to determine how it can expand.  By adopting a more proactive mindset, such as with utilization of its client base for needs assessment, a company can find out about the kinds of issues its clients may be having and as a result partner with them by acquiring the necessary learning while helping them learn as well.  This method is very effective at generating new business out of the old client base through existing channels.

Challenges

When entering new markets, there are challenges that can be encountered along the way including: (a) Establishing brand awareness in local markets; (b) Getting the right logistics in place to deliver end service and ensure proper distribution channels; and (c) Building knowledge of local customer.

Strategies for surmounting these challenges for a company include: (1) Looking at assets in place to leverage going forward; (2) Identifying partners who are much larger and are serving customers that a company is looking to service; (3) Finding out where a company can add value to potential customers and which distribution partners are already embedded through significant distribution and knowledge of that customer in local market; (4) Launching a sales affiliate program to enable providers in the network to bring customers from target local market.  In this latter case, business development affiliates can be provided with a cut of the lifetime revenue for every customer they refer.

Staffing

When it comes to staffing, maintaining the structure that a company has in the United States and then using it as it expands globally is often a good strategy.  Based on legal and jurisdictional requirements and depending on the limits, taking one’s time to find the right people and to figure out the staffing needs in that specific country are necessary prerequisites .  To this effect, getting people with a combination of good local roots and experience while maintaining U.S. oversight, regulation and review is cited as one approach to ensure a high level of individuals in that location.  Since every project a company works on touches more than just the United States, staffing and culture become crucial.  Finding the right partner or joint venture might be crucial in some countries and getting such relationships down to two degrees of separation is preferred as trust is a huge factor.  To that effect, when looking at staffing, using independent contractors does make sense in the beginning.

As a company goes global, one of the concerns is often how to deal with customers on a 24hr basis.  One solution is using technology through a 24/7 business center & help desk to service offices in different time zones.  Maintaining a people presence on the ground, getting as local as one can, combined with the use of technology is often the solution to get the job done and service the client.  Another option would be to outsource the help desk service but this is not always the best route especially if that help desk caters to many companies.  Another strategy is to provide a similar service from the U.S. by appointing a person to be on call through a daily shift schedule.

A model of venture funding

For a technology company looking to scale quickly, often the question that is asked is how can you succeed quickly or fail quickly.  To be sure, how can a program provide the right tools, network and capital to launch a successful joint venture.  There are incubator programs that can provide seed funding to build an initial product, scale further and then culminate in a final product to present business concept, show traction in recent months and vision for scaling business thereon.  By starting small and aligning oneself with incubator programs that provide resources to help, a company can take the proof of concept to market through a systematic process of validation and subsequent funding.

Marketing

In any business, marketing is crucial.  It is really important to have face to face contact especially in the international marketplace.  Giving free samples and open courses and aligning with other groups such as chambers, US Department of Commerce, and participating in international trade shows will be helpful as people who need services are there.

For a service company, writing articles, doing presentations, sponsoring conferences and developing good materials to give out can go a long way.  For a company looking to expand globally, it has to focus and do some of that in every jurisdiction it seeks to bring market share from.   While utilizing outside distribution partnerships and bigger marketing platforms to get the word out goes a long way, a company can also rely on PR with a fundamental belief that it is adding value and has an interesting story to tell.  Specifically, a company needs to identify who out there is talking about or solving these problems, and how can they add value to these writers about these topics and make themselves a resource.  A company who receives recognition from Forbes, Reuters, NY Times, and industry magazines can also gain great traction in spreading brand awareness.  As a small business, it is easy to believe you are small but if you believe you are adding value to someone’s life, there are people who want to hear that story.  In this case, both blogs and competitors can be sought after as resources as well.

Role of Culture and Technology

When entering a new market, if you’re on your own and don’t have someone in the local market that speaks the language or understands the culture, that’s a problem.  While individuals at the senior level usually speak English, those at the operating level do not.

In addition to resources and feet on the ground, having a mindset for going international is paramount.  Recognizing that you are a small business and that you have resources or constraints at your disposal, can ultimately enable you to be more creative in finding ways to build scale.  One example includes a company who changed its style of communication in the U.S. and also overseas by putting all its marketing content in several languages on blogs and website.  Taking the time to understand the culture of the country you are going into can be a crucial first step in opening up the gateways to that market.  There are governmental agencies that have resources for that.  The idea is to make global expansion strategic where it is a natural outflow.

Advances in social and digital have provided many new opportunities to reach and understand consumers, and find new markets for your product.  Build it and they will come is dangerous especially without understanding the culture and technology.  Try going to Canada since they have same language and time zone.  Find good partners and take time to get to know them by qualifying them in every single dimension. If you can’t understand how the partner is going to make money then they’re not going to be a good partner.  It’s not because your product works in this country, that it will work overseas.  You might have to make adjustments to make it work in local market.  Get people on the ground to help with the diligence process and go visit that company and really get to know it to find out what the potential pitfalls are.

One of the challenges of globalization often lies with the people working within the organization itself. Individuals in various departments of a company typically focus on their own expertise and don’t think from their perspective as to how what they do can impact the globalization of the company.  In this case, it is often crucial to look at the company culture and identify how certain elements can be tweaked in an embryonic stage that can impact globalization of the company.

Customer acquisition strategies

When considering global commerce and the prospect of acquiring clients in new markets, there are several strategies that can be employed to accomplish that.  One approach is to begin with big global clients and gain their endorsement that can in turn be the conduit to bringing a product to another market.  This would of course necessitate first adapting, translating, and testing the product in one language and then using both the acquired learning curve and economies of scale to expand into other markets.  This strategy would be centered on acquiring competency in one sector in one market at a time and using that to acquire competencies in other markets.

Specifically, for a service company that is seeking a wide footprint with companies across the world, it is essential to offer a broad spectrum of services.  Some companies may use a customer-driven approach to acquiring new clients, whereby their website drives demand for their products, namely their website educates and inspires regardless where they’re from.    While a company could reach certain customers through strategic partnerships with certain distributors or retailers, others who find them on the web in other markets seek to find them locally.  By partnering with a third-party logistics company, it is possible to ship a product to over 100 countries without focusing on the core competencies needed to deliver to those countries from a tax and regulations perspective.  For brand manufacturers, when you’re selling to the end user but also selling to the businesses who are selling your products, you have to make sure you have great partnerships across the board to be able to offer a product or service that meets their needs but that will in turn meet the needs of the end user.

Outsourcing and Sourcing Globally

For companies interested in taking a product to the global markets, it is often helpful if the quality, service and price are up to par.  A company in that position in the U.S. market will often find that advertising will be negligible as customers, local distributors and dealers will come asking for it.   This will then necessitate a global sourcing strategy whereby a company will need to find people that they could trust and work with.  In this case, it is always best to meet them and build a personal relationship as what benefits the company should benefit them.  When you source internationally, you may find out that the cost is less than doing it in the U.S.  Once you master that, it’s fairly simple to source and there’s so much more you can gain.  The biggest challenge is that a company’s supply chain can only be so long.  Transit time could be a challenge especially for consumer products in which case long shelf life helps.

A critical strategy when it comes to outsourcing is focusing on what you do best and outsourcing other functions.  This takes less working capital to drive and grow your business.  By using local expertise, a company can create partnerships with entities that may be far better than you.  The result is that a company will have faster market penetration tying into exports locally.

Legal requirements

Understanding the local regulations and legal requirements, as well as the US regulations is crucial when entering a new market.  This can be especially helpful when thinking about bringing profits home namely, expatriating the money you make.  If you’re not sure, it is recommended that you partner with local chambers of commerce, brokers, and gain legal representation.  Trade marking is another issue worth considering when it comes to packaging product, for example, owning a trademark in the U.S. doesn’t mean you own it globally.

Finding out what is the value of the currency in the markets you’re working in can help mitigate some challenges.  Here, it can be very beneficial to get professional help through accountants, lawyers and local bankers.  Given a thorough understanding of the rules and regulations that impact how to establish a budget, a company can effectively plan by accounting for fluctuations and inflation in that market.

Understanding the local norms that like products would have in that marketplace is crucial as a company expands into a new market; sometimes there are standards when it comes to product sizes that are cultural norms whether it is law or not that one needs to take into consideration.  Understanding the competitive landscape by getting out there and partnering with local trade associations, conferences, trade shows is very helpful at identifying specific regulations in local markets.  Branding and quality is also the name of the game here.  Given right protections from a trademark point of view, brand is critical and so is getting the name out.  Manufacturing can be outsourced but controlled through agreements.  One effective method is establishing global market concentrations whereby a company is able to control certain markets and allow manufacturers to control other markets, while competing equally in the rest of the world.

Competitive Advantages

For a technology company, being ahead of the game is a key competitive advantage.  Partnering with third-party logistics warehousing fulfillment companies to enable them to distribute on the ground is crucial.  Smaller distributors are better and easier to deal with since they care about the success of their business and as a result have your small interests at heart.  Finding them is all about networking which leads to partnerships, trust and then referrals.

If you are a service provider and have a unique service that somebody in the market doesn’t have but is a competitor in other parts, you may be able to link with them and develop a partnership that gets you launch successfully in that market.  If you are a product, there may be a symbiotic relationship with a product of another company that might tie into your product which in turn will allow you to build a partnership that may help you overcome existing competition

Without much experience in a specific region, it is very helpful for a company to join local category industry organization(s) that can apply to business model and connect individuals, suppliers and retailers from around the world to discuss critical issues and do the work.  This can go a long way in establishing presence, understanding how to meet customers and competitors, all while helping the company gain a better positioning in places where it previously was not located.

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Meadowlands Magazine

Meadowlands Magazine

Meadowlands Magazine, the official publication of the Meadowlands Chamber and its affiliate organizations, has proudly served the business community of the Meadowlands region for over 40 years. We are among largest business magazine in New Jersey (second by circulation) and offer prime visibility opportunities for businesses to connect with potential customers.

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