One of the tragedies of the recent economic downturn is the way investors are withdrawing from entire countries. Hungary is the latest in a line of Eastern European countries to fall into crisis because investors are pulling out. The twin problems are the opportunism of the lender and uncontrolled expenditure by the borrower. This attitude has been lionized in the West for decades - hence the enormous credit card debt, and we should not be surprised at its internationalization.
The shame is that this crisis is in my view unnecessary. Investing partnerships with planned spend and return limits would significantly have mitigated the situation. Investors would not have then pushed themselves to the edge of their capability, and spenders would more quickly realize return, stability and growth.
When it comes to international expansion it’s easy to fall into the trap of dreaming big without fully realizing how much energy and resources growing dreams eat up. There’s nothing more discouraging than a flash in the pan, when short-lived euphoria gives way to sadness and demise.
I believe the current situation should be a wake-up call for us to partner internationally in a controlled growth model. Exceptional marketing can lead to great exposure in a new market, but if, for example, supply chains are not up to demand that publicity will quickly turn negative. On the other hand, well-planned holistic approaches will enjoy long-term growth. Then we’ll really be able to celebrate.
Thursday, October 30, 2008
Monday, October 27, 2008
Marketing with personality internationally
Personalizing brand is a well-beaten path in the West. Who can ignore the geico gecko? (I’m partial because he’s got a London accent). Not sure exactly the the geico cavemen are all about - oh I forgot, “So easy a caveman can do it.” Whatever your thoughts about these two geico creations, it’s not every day that Hollywood attempts to make a series about an advertising idea. (OK, it failed, but still, it’s pretty impressive to get that far.)
Whatever you think about the effectiveness of these brand personalities for improving geico’s sales, these figures have certainly created an impression. What happens though if geico tries to go international? WIll the geico gecko actually translate in London? How will Londoners perceive geico as a result? I guarantee our friend the gecko will not be in the same light as Americans. How will that affect the perception of the geico brand? Now let’s go one step further. How will it be perceived in a country where geckos are ubiquitous? Are geckos seen as pests? Are they seen as food? Are they seen as dirty? Do they have religious significance? What’s the image of a reptile talking to a man? Can a male gecko talk to a woman? Then let’s take the cavemen. Does the perception of a caveman look anything like the same in other cultures?
These are just a few of the questions that should be considered when developing an international personality for a brand. Is it too complex? Not really. Coca cola has successfully made its personality known around the world without even a creature to head it up!
Whatever you think about the effectiveness of these brand personalities for improving geico’s sales, these figures have certainly created an impression. What happens though if geico tries to go international? WIll the geico gecko actually translate in London? How will Londoners perceive geico as a result? I guarantee our friend the gecko will not be in the same light as Americans. How will that affect the perception of the geico brand? Now let’s go one step further. How will it be perceived in a country where geckos are ubiquitous? Are geckos seen as pests? Are they seen as food? Are they seen as dirty? Do they have religious significance? What’s the image of a reptile talking to a man? Can a male gecko talk to a woman? Then let’s take the cavemen. Does the perception of a caveman look anything like the same in other cultures?
These are just a few of the questions that should be considered when developing an international personality for a brand. Is it too complex? Not really. Coca cola has successfully made its personality known around the world without even a creature to head it up!
Friday, October 24, 2008
Is Satellite important in the Majority World?
While many may feel the Majority World is not a real market for their products and services, mobile phone and electronics companies who are ahead of the game, have long realized its potential. I remember a friend of mine who visited rural Uzbekistan. He told me that possession of a mobile phone was more important than proper flooring or an inside bathroom to the locals there.
The mobile phone connects people across distances that are hard to travel with little infrastructure. Satellites offer the capability of connecting workforces and markets at comparitively little cost. The same is true of several other methods of communication.
The question now is how to best use technological advance to promote true market growth? We need to assess:
1) What technology is available at present in a country or market?
2) What technology could be available in the near future at affordable rates?
3) How this technology is applied in communication in our target market(s)?
4) How it could be applied in communication in our target market(s)?
The exciting thing about this kind of entrepreneurial marketing is that the future is limitless.
The mobile phone connects people across distances that are hard to travel with little infrastructure. Satellites offer the capability of connecting workforces and markets at comparitively little cost. The same is true of several other methods of communication.
The question now is how to best use technological advance to promote true market growth? We need to assess:
1) What technology is available at present in a country or market?
2) What technology could be available in the near future at affordable rates?
3) How this technology is applied in communication in our target market(s)?
4) How it could be applied in communication in our target market(s)?
The exciting thing about this kind of entrepreneurial marketing is that the future is limitless.
Tuesday, October 21, 2008
Volatility, Sensitivity and Sense
One by-product of the volatility of the stock market and the uncertainty of the economic situation is an increased sense of insecurity. Where there is insecurity there is greater emotion and sensitivity to real and perceived mistakes. This makes the job of marketing in unfamiliar communities and countries more complex.
All of us recognize in daily life how relationships suffer because of stress. Successful marketing is in many ways successful relationship-building, and understanding how to deal with the heightened reactions stress brings, will help us emerge ahead of the curve.
There are many aspects to this dilemma and here are a few questions that I suggest be researched and answered to do with one aspect as we go along this path of development:
We know of the well-known faux-pas of the Nova car model in Mexico, as well as the riots that broke out in Bangladesh because of the Bata shoe logo, and we are consequently anxious to avoid falling into the same trap. But how will we know?
1) Do we have any locals to help advise us?
2) Do these locals have any partisan tribe, people, language, social status that could give them blindspots?
3) Will they tell us the hard truth or does their culture or their need require they tell us what we want to hear?
4) How will we discern the answer to 3)?
These are just a sample of some questions that we need to address. It's worth remembering that getting the answers wrong in a time of heightened stress will likely lead to more extreme consequences. I'd be interested to hear of the approaches of others in this process.
All of us recognize in daily life how relationships suffer because of stress. Successful marketing is in many ways successful relationship-building, and understanding how to deal with the heightened reactions stress brings, will help us emerge ahead of the curve.
There are many aspects to this dilemma and here are a few questions that I suggest be researched and answered to do with one aspect as we go along this path of development:
We know of the well-known faux-pas of the Nova car model in Mexico, as well as the riots that broke out in Bangladesh because of the Bata shoe logo, and we are consequently anxious to avoid falling into the same trap. But how will we know?
1) Do we have any locals to help advise us?
2) Do these locals have any partisan tribe, people, language, social status that could give them blindspots?
3) Will they tell us the hard truth or does their culture or their need require they tell us what we want to hear?
4) How will we discern the answer to 3)?
These are just a sample of some questions that we need to address. It's worth remembering that getting the answers wrong in a time of heightened stress will likely lead to more extreme consequences. I'd be interested to hear of the approaches of others in this process.
Customer service - the old new way
I spent two and a half hours on the phone today with a State service. Probably 45-60 minutes of that time was waiting for someone to pick up the phone. The first time someone picked up the phone they were impolite, aggressive, patronizing and generally unpleasant, unknowledgeable and unhelpful. When I asked to speak to their supervisor they hung up on me without a word. This surprised me as the previous week I had spoken to someone who was very helpful in the same department. I called back, initially to complain - something I do only extremely rarely. This time I spoke to someone whose manner was very helpful and warm. They put me through to a supervisor, who then advised me to speak to another department. I called the other department and was told I needed to speak to the first department again. I called the first department and was told it was actually the second department but I needed a supervisor to sort out the mess. I called the second department, got a supervisor who told me I needed a third department. I called the third department and two and a half hours later talked to someone who knew the big picture, had power and understood my questions.
I have to ask myself - “Why didn’t all the people have the education to understand the big picture?” I also have to ask myself, “Why could only one department out of three deal with the issue they were all set up to deal with?” I know who I’ll call in the future. I also know who I’ll avoid at all costs. If this were a commercial enterprise, it would go bankrupt very quickly. It’s amazing to me that after a century of technology, we still cannot organize a more “user friendly” society.
Right now the economic situation has caused great tension. Can you imagine the gains that could be made by a friendly, customer-centric model in this environment? My experience today reinforced my determination as a marketer to see things from the client’s point of view. The relief I felt talking to a knowledgeable and friendly person who had the power to follow through was physically palpable. How can we create this physical and mental relief for our clients?
I have to ask myself - “Why didn’t all the people have the education to understand the big picture?” I also have to ask myself, “Why could only one department out of three deal with the issue they were all set up to deal with?” I know who I’ll call in the future. I also know who I’ll avoid at all costs. If this were a commercial enterprise, it would go bankrupt very quickly. It’s amazing to me that after a century of technology, we still cannot organize a more “user friendly” society.
Right now the economic situation has caused great tension. Can you imagine the gains that could be made by a friendly, customer-centric model in this environment? My experience today reinforced my determination as a marketer to see things from the client’s point of view. The relief I felt talking to a knowledgeable and friendly person who had the power to follow through was physically palpable. How can we create this physical and mental relief for our clients?
Thursday, October 16, 2008
Is Inaction the Best Way Forward?
The US economic meltdown has most companies so unsure of the future they don't know what to do next. The fact is that today's professionals haven't dealt with such an uncertain situation. One of the key questions is, "Should we wait to see, or should we do whatever we think is the best way forward?" The following question is, "If we do something, what happens if it proves to be the wrong thing? What happens if things change again?" That can often lead back to inaction.
I suggest that while precipitous action may be a bad idea, inaction is not going to help. We can either become pawns at the whim of a storm, or we can try to make a new future. We're not all powerful. We can't be flawless. We will have ups and downs, but we can also be creative and insightful. I think this could be the key time to build ethical and productive international business models for the future. Europe had a meltdown in the 20s along with the US a few years later, yet the respective economies ultimately recovered and boomed with a model of better macro-oversight.
Francis Schaeffer, the philosopher, once wrote a book, "Small is beautiful". I think this a great motif for a new international expansion model. Typically most multi-nationals have become multi-national by buying companies, not by expanding from the ground up. In my view the company that understands how to build from the ground up internationally will be the company that becomes strongest in the next few decades. How can we build from the ground up? Do you agree?
I suggest that while precipitous action may be a bad idea, inaction is not going to help. We can either become pawns at the whim of a storm, or we can try to make a new future. We're not all powerful. We can't be flawless. We will have ups and downs, but we can also be creative and insightful. I think this could be the key time to build ethical and productive international business models for the future. Europe had a meltdown in the 20s along with the US a few years later, yet the respective economies ultimately recovered and boomed with a model of better macro-oversight.
Francis Schaeffer, the philosopher, once wrote a book, "Small is beautiful". I think this a great motif for a new international expansion model. Typically most multi-nationals have become multi-national by buying companies, not by expanding from the ground up. In my view the company that understands how to build from the ground up internationally will be the company that becomes strongest in the next few decades. How can we build from the ground up? Do you agree?
Wednesday, October 15, 2008
No need to panic? (3)
OK - it’s not really a surprise Wall Street had another turbulent day. I believe it’s time to comprehend a key idea - “We need others“. Isolation and belief in one’s own invincibility are recipes for disaster. Accepting this, the next item on the agenda is developing solid adaptable plans to build revenue by expanding into new markets internationally. In the current economic situation, partnerships need to be strategic. If we are too powerful in the partnership, then we have to ensure we neither become a feudal lord, nor a charity. If we are too weak in a partnership, we have to ensure our partner does not become feudal lord or charity. We need to accurately assess our real or potential strength as well as that of our potential partner. For example, after World War II Japan assessed it had no significant supplies of raw materials. As a result it decided to concentrate on developing industries that needed significant intelligence and little in the way of raw materials.
If we are going to partner internationally I believe one area to investigate in potential partner countries and communities is their potential. Potential is a lot easier to identify the more creative and holistic our vision. One example would be communication or marketing methods. The West is very dependent on its technology, but in Majority World countries, primary social communication structures are still paramount. This heightens the importance of understanding those structures; how they could relate to marketing in the partner country as well as how they may help marketing in our own countries. Secondly it heightens the importance of building flexible, strong, forward looking, intercultural relationships with the people that will be important in a partner country's societal structure. These people are sometimes very apparent, but oftentimes undiscovered as the traditional unicultural mindset has to think counterintuitively to locate them.
If we are going to partner internationally I believe one area to investigate in potential partner countries and communities is their potential. Potential is a lot easier to identify the more creative and holistic our vision. One example would be communication or marketing methods. The West is very dependent on its technology, but in Majority World countries, primary social communication structures are still paramount. This heightens the importance of understanding those structures; how they could relate to marketing in the partner country as well as how they may help marketing in our own countries. Secondly it heightens the importance of building flexible, strong, forward looking, intercultural relationships with the people that will be important in a partner country's societal structure. These people are sometimes very apparent, but oftentimes undiscovered as the traditional unicultural mindset has to think counterintuitively to locate them.
Tuesday, October 14, 2008
No need to panic? (2)
Today there was good news on Wall Street, but the jury is still out as to the long-term effect of the bail-out package through 2009. Macro-answers are needed to macro-problems for a quick fix, but long-term health is going to depend on other criteria, one of which is international relationships. Nowadays there is discussion as to whether increased international connectivity lessens or heightens the risk of global financial collapse. I suggest it could do both.
It should be no surprise that certain large multi-nationals attempted to profit off the least advantaged in the US. After all, western multi-nationals have been using the same tactics for years in other countries. Consequently, no outcry was made when these same policies were put to work in the US. Previously, the countries of origin of such multi-nationals, were able to keep the unhealthy economies abroad at arm’s length, even profit from the situation by demands for excessive interest and the like. The plight of citizens abroad did not concern such companies, and apparently the plight of the least advantaged in the US did not concern them either. Perhaps it had to hit home for executives to realize the real impact of their actions.
We have to hope this lesson is learned, because now increasing connectivity means no-one can ’seal off’ a market or country in crisis. Even if we wanted to return to the past, we cannot do so. International connectivity is only going to increase with technological advance. Consequently, we have to plan for the future, ensuring the long term health of countries and markets in which we do business. The maxim, “Do to others as you would have done to you”, seems to apply well. Just consider the potential. If a very poor community or country is introduced to growth opportunity, its purchasing power will also increase dramatically. If you exploit that country or hold large interest payments over its head, it will never achieve such power. The greater number of stable markets and economies in the world, the better the world will be able to withstand the collapse of one.
I believe the best hope for the US economy in the 21st century, is to invest in international markets - and particularly in Majority World countries. I’ll develop this more tomorrow.
It should be no surprise that certain large multi-nationals attempted to profit off the least advantaged in the US. After all, western multi-nationals have been using the same tactics for years in other countries. Consequently, no outcry was made when these same policies were put to work in the US. Previously, the countries of origin of such multi-nationals, were able to keep the unhealthy economies abroad at arm’s length, even profit from the situation by demands for excessive interest and the like. The plight of citizens abroad did not concern such companies, and apparently the plight of the least advantaged in the US did not concern them either. Perhaps it had to hit home for executives to realize the real impact of their actions.
We have to hope this lesson is learned, because now increasing connectivity means no-one can ’seal off’ a market or country in crisis. Even if we wanted to return to the past, we cannot do so. International connectivity is only going to increase with technological advance. Consequently, we have to plan for the future, ensuring the long term health of countries and markets in which we do business. The maxim, “Do to others as you would have done to you”, seems to apply well. Just consider the potential. If a very poor community or country is introduced to growth opportunity, its purchasing power will also increase dramatically. If you exploit that country or hold large interest payments over its head, it will never achieve such power. The greater number of stable markets and economies in the world, the better the world will be able to withstand the collapse of one.
I believe the best hope for the US economy in the 21st century, is to invest in international markets - and particularly in Majority World countries. I’ll develop this more tomorrow.
Friday, October 10, 2008
No need to panic?
Rapid changes in the world require even greater adaptability and foresight than before. But that’s all. OK, the economy is currently in a mess, but to me it’s surprising that it’s only with hindsight everyone is castigating those who tried to bring in quick and large profits by exploiting those whose economic situation was the most unstable. I agree, it should never have been allowed. In my view it’s unethical and, frankly, nonsensical as the premise was never based on reality. The question is, why is it only now that establishment figures are condemning these practices? That is the “surprising” element. I suggest it is because they were neither concerned with lack of ethics nor with unrealistic theory that promised wealth until the effects of these practices hit their companies and their own wealth. Now they are stuck in a bad situation, and their own planning and adapability are being brought into question.
The speed of this collapse is staggering, but today the world changes at a very rapid rate. Most analysts agree nowadays, that to meet these changes, business plans must be adapted every 90 days or so. This is where it definitely helps to “be ahead of the curve”. Wealth is ultimately a relatively fixed commodity - it’s the distribution of wealth that changes. This means Wall Street rumor, fiction and forecast based investment are speculative and not “real”, so this is where future plans need especially to be foresightful and adaptable to stand a realistic chance of success.
There is hope for the future. People still have the same abilities, the same raw materials, the same learning and the same capacity to develop. The current crisis should just warn us how to develop, and I suggest it warns us that ethics and realism are terms we should pay more attention to in building a long-term sound economic future.
Next week we’ll look at how this might affect development of “poorer” communities both at home and abroad.
The speed of this collapse is staggering, but today the world changes at a very rapid rate. Most analysts agree nowadays, that to meet these changes, business plans must be adapted every 90 days or so. This is where it definitely helps to “be ahead of the curve”. Wealth is ultimately a relatively fixed commodity - it’s the distribution of wealth that changes. This means Wall Street rumor, fiction and forecast based investment are speculative and not “real”, so this is where future plans need especially to be foresightful and adaptable to stand a realistic chance of success.
There is hope for the future. People still have the same abilities, the same raw materials, the same learning and the same capacity to develop. The current crisis should just warn us how to develop, and I suggest it warns us that ethics and realism are terms we should pay more attention to in building a long-term sound economic future.
Next week we’ll look at how this might affect development of “poorer” communities both at home and abroad.
Tuesday, October 7, 2008
Why companies do not go abroad
The world is more accessible today than 20 years ago and the US economy is in an unhealthy state. Given the above situation, it seems highly desirable to decrease vulnerability by developing healthy foreign markets. What stops companies from taking this step of growth? I suggest some of the following may be high on the list:
1) Lack of vision - it never crossed their mind.
2) Fear of the unknown.
3) Too many choices of country and city end up leading to inaction due to lack of focus.
4) Lack of knowledge as to how.
5) Previous bad experience(s).
6) Not sure how to match the company’s products or services with the foreign culture.
7) Afraid of the potential cost.
While other reasons may exist to be resolved, these can be answered fairly easily. What the company needs is a person or a service that makes the unknown knowable and understandable. The company also needs a person or a service who can create opportunities for minimal output. Lastly, the company needs a person or service who is astute in matching local cultures with the company’s products and services, thus foreseeing opportunities for great market growth. Imagine what could happen if your company had the capacity to bridge the language and culture gap, develop markets for little cost, learn quickly from previous mistakes and repeat the process. This can be your reality.
1) Lack of vision - it never crossed their mind.
2) Fear of the unknown.
3) Too many choices of country and city end up leading to inaction due to lack of focus.
4) Lack of knowledge as to how.
5) Previous bad experience(s).
6) Not sure how to match the company’s products or services with the foreign culture.
7) Afraid of the potential cost.
While other reasons may exist to be resolved, these can be answered fairly easily. What the company needs is a person or a service that makes the unknown knowable and understandable. The company also needs a person or a service who can create opportunities for minimal output. Lastly, the company needs a person or service who is astute in matching local cultures with the company’s products and services, thus foreseeing opportunities for great market growth. Imagine what could happen if your company had the capacity to bridge the language and culture gap, develop markets for little cost, learn quickly from previous mistakes and repeat the process. This can be your reality.
Monday, October 6, 2008
Wall Street Crash - Why look abroad?
The uncertain state of the US market has caused most businesses that are healthy to act very cautiously. Businesses in precarious situations are already trying to cut costs. Caution is prudent, and cost-cutting may well be necessary. However, both of these approaches need to be balanced by forward thinking action. Insightful action now can bring not only survival but healthy growth.
Those who capitalize on markets first are those who foresee opportunity and act before it becomes openly evident to all. This requires a certain amount of "prophetic" thought and action. This is true of international markets as well as national markets. Decisions made today make their effects felt years into the future.
What are the advantages of looking abroad?
1) Very often this can be done at considerably lower cost than in the US. This advantage is doubled if the US market is scared because of the state of the US economy.
2) Many countries have nationals looking to bridge partnerships with the US. Finding the right person or people, can provide immediately accessible markets.
3) You have the opportunity to be the FIRST company in your niche, and therefore to become THE name associated with that particular service and product.
With all these advantages, why do companies fail to make this expansion? We'll look at that tomorrow.
Those who capitalize on markets first are those who foresee opportunity and act before it becomes openly evident to all. This requires a certain amount of "prophetic" thought and action. This is true of international markets as well as national markets. Decisions made today make their effects felt years into the future.
What are the advantages of looking abroad?
1) Very often this can be done at considerably lower cost than in the US. This advantage is doubled if the US market is scared because of the state of the US economy.
2) Many countries have nationals looking to bridge partnerships with the US. Finding the right person or people, can provide immediately accessible markets.
3) You have the opportunity to be the FIRST company in your niche, and therefore to become THE name associated with that particular service and product.
With all these advantages, why do companies fail to make this expansion? We'll look at that tomorrow.
Friday, October 3, 2008
To homogenize or not to homogenize - that is the question.
Today many companies "expand" internationally simply by buying foreign companies. The foreign company is seen as a good strategic investment, either for its success, or for its potential. These mergers and buyouts happen in corporate boardrooms. Only afterwards is serious thought given as to how the buying company "brings the new products into its fold". Many times the foreign companies purchased produce similar products to the buying company. In this way the buying company reduces foreign competition and gains a readymade foothold into a new foreign market. Typically the new multinational seeks to homogenize its branding and products, but much confusion exists as to what limits, if any, should be established for this homogenization process.
Here are just some of the issues:
1) The indigenous brand is recognized and associated with a certain quality image. To what extent is the new overseas brand recognized and appreciated? Very often Western companies imagine that foreign nationals perceive the company with the same admiration as the Multi-National's Chief Marketing Officer. Furthermore, Western companies in particular are liable to forget that in a foreign national's mind, the Multinational's country of origin and its history of interaction are closely linked with the brand image itself.
2) Homogenizing publicity sounds great as it might reduce overall marketing costs, but do you know for sure that all the material is as desirable, as effective or even as acceptable in the new country?
3) Any homogenization process essentially imports significant amounts of the buying company's culture onto the brand image in the new country. To what extent may you lose national brand loyalty and identity in this process? This may also affect planned expansions into new same/similar language countries.
4) What are the differences between the buying country's products and the new country's products. Should they be kept distinct? If they are unified will a significant functionality be lost? Could that functionality be added to the buying company's product?
With these and many other questions, companies often purchase and act, then seek to "clean up". How much time, money and energy could be saved if some of these questions were answered before going ahead with operational decisions?
Here are just some of the issues:
1) The indigenous brand is recognized and associated with a certain quality image. To what extent is the new overseas brand recognized and appreciated? Very often Western companies imagine that foreign nationals perceive the company with the same admiration as the Multi-National's Chief Marketing Officer. Furthermore, Western companies in particular are liable to forget that in a foreign national's mind, the Multinational's country of origin and its history of interaction are closely linked with the brand image itself.
2) Homogenizing publicity sounds great as it might reduce overall marketing costs, but do you know for sure that all the material is as desirable, as effective or even as acceptable in the new country?
3) Any homogenization process essentially imports significant amounts of the buying company's culture onto the brand image in the new country. To what extent may you lose national brand loyalty and identity in this process? This may also affect planned expansions into new same/similar language countries.
4) What are the differences between the buying country's products and the new country's products. Should they be kept distinct? If they are unified will a significant functionality be lost? Could that functionality be added to the buying company's product?
With these and many other questions, companies often purchase and act, then seek to "clean up". How much time, money and energy could be saved if some of these questions were answered before going ahead with operational decisions?
Thursday, October 2, 2008
Reasons why Internationalization Fails - 3 (Focus)
One reason internationalization often fails is lack of focus. This can take two major forms: lack of definition of intent in the new country and overexpansion to too many countries too soon.
It seems like a great idea to internationalize, but does our new market really need what we have to offer? Several decades ago one notorious European company persuaded large numbers of African women that its powdered milk was much better for their babies than breast milk. This company exploited people with little, tried to create demand where there was no need, and their product actually had a comparitively negative affect on the health of the children. For long-lasting growth we need to identify a real need and meet it before anyone else does. This kind of entrepreneurial marketing is fundamental to real market growth in the future. Richer economies have one set of market needs while poorer countries have others. Some obvious current examples of market needs for poorer countries are products and services that create greater wealth and the capacity to expand business. In richer countries entrepreneurial marketers may need to listen for specific adaptations of existing products and services that will give them the edge. Obtaining this information is key, and requires both great cultural insight as well as great instinct to see niches that even the host country may not yet have seen. Once identified the key is to focus narrowly on promotion of this one product or service. Diffusion of focus results in unclear messaging and often failure.
In the same way, the rate of international expansion needs to be focused and planned. Companies contemplating their first international expansion will do well to select only one country and one target market at first. Some companies may consider it best to try a “familiar” country such as Canada to the US, the Republic of Ireland to the UK, Belgium to Holland or Luxembourg to France. It is likely nationals already exist in the company structure and it is easy to communicate and learn lessons. Other companies may see a niche in the former Eastern Bloc countries, or in the Majority World. In both cases good research should select one country to start with. I would argue that even within one country the focus be narrowed down to a true geographic center. This way as the inevitable lessons are learned they can be learned and put towards future expansions with minimum cost.
Expansions take an incrementally increasing amount of resources. What looks like little output to start with can quickly become major output, unless the new international structure produces returns quickly. This will be the subject of tomorrow’s blog.
It seems like a great idea to internationalize, but does our new market really need what we have to offer? Several decades ago one notorious European company persuaded large numbers of African women that its powdered milk was much better for their babies than breast milk. This company exploited people with little, tried to create demand where there was no need, and their product actually had a comparitively negative affect on the health of the children. For long-lasting growth we need to identify a real need and meet it before anyone else does. This kind of entrepreneurial marketing is fundamental to real market growth in the future. Richer economies have one set of market needs while poorer countries have others. Some obvious current examples of market needs for poorer countries are products and services that create greater wealth and the capacity to expand business. In richer countries entrepreneurial marketers may need to listen for specific adaptations of existing products and services that will give them the edge. Obtaining this information is key, and requires both great cultural insight as well as great instinct to see niches that even the host country may not yet have seen. Once identified the key is to focus narrowly on promotion of this one product or service. Diffusion of focus results in unclear messaging and often failure.
In the same way, the rate of international expansion needs to be focused and planned. Companies contemplating their first international expansion will do well to select only one country and one target market at first. Some companies may consider it best to try a “familiar” country such as Canada to the US, the Republic of Ireland to the UK, Belgium to Holland or Luxembourg to France. It is likely nationals already exist in the company structure and it is easy to communicate and learn lessons. Other companies may see a niche in the former Eastern Bloc countries, or in the Majority World. In both cases good research should select one country to start with. I would argue that even within one country the focus be narrowed down to a true geographic center. This way as the inevitable lessons are learned they can be learned and put towards future expansions with minimum cost.
Expansions take an incrementally increasing amount of resources. What looks like little output to start with can quickly become major output, unless the new international structure produces returns quickly. This will be the subject of tomorrow’s blog.
Wednesday, October 1, 2008
Reasons Why Internationalization Fails - 2 (Use and Abuse)
Looking at our motivation is important, because it sends very clear signals to those in our new “partner” country. In the 20th century many Western multinationals seemed to have the main goal of “taking the maximum” and “giving the minimum”. Some examples of this trend would be an American rutile mining company and a Swiss aluminium mining company in Sierra Leone, who managed to ravage areas of arable land while reducing workers’ wages. The Swiss company reported on a UK television program in 1989/90 that they “had” to put workers’ wages down to 25 cents a day plus a bowl of rice. Other examples are such as well-known US entertainment company and the cheap T-Shirt-making labor they recruited in Haiti. In each case the mark-ups on the cost for these materials were several thousand percent, and the “partner” country saw next to nothing. (In fact in countries where corruption was rife, often deals were “made with the devil”, profiting a dictator at the expense of the people).
This might sound like a study on ethics, but there is also a very pragmatic and selfish business observation to be made from these practices. In each of these cases, the end result is antagonism to the Western country(ies) involved and therefore no loyalty to build the business. While a company may make a short-term gain (in the past this could be a decade or two), it will ultimately lead to collapse, reprisal and an enormous international marketing obstacle to overcome. This “take what we can” mentality is therefore very short-sighted. While it may have pleased shareholders for as much as a decade or even two in the past, it will not please those shareholders’ children. As the world changes today at a much faster pace, future “gains” through the “take it all method” are likely to be very short-lived.
What is the answer? The same as fruitful marketing in one’s own country. Give great service. Build brand loyalty and goodwill. Have your workers be enthusiastic marketers for your organization. Give them ownership and access to higher levels of authority. Recognize the skillsets and experience they bring while bringing yours to them. Some companies are beginning to initiate training in very underdeveloped areas of the world. Those that successfully meet standards are able to create wealth that improves the whole family and community. The message given to the new internationals is, “You are valuable. If you give your best, we will give you ours”. This kind of mass loyalty growth will give companies stability in unstable areas of the world. This kind of international partnership will produce the next “mega-companies.”
Filed under: New Business in New Countries | No Comments »
This might sound like a study on ethics, but there is also a very pragmatic and selfish business observation to be made from these practices. In each of these cases, the end result is antagonism to the Western country(ies) involved and therefore no loyalty to build the business. While a company may make a short-term gain (in the past this could be a decade or two), it will ultimately lead to collapse, reprisal and an enormous international marketing obstacle to overcome. This “take what we can” mentality is therefore very short-sighted. While it may have pleased shareholders for as much as a decade or even two in the past, it will not please those shareholders’ children. As the world changes today at a much faster pace, future “gains” through the “take it all method” are likely to be very short-lived.
What is the answer? The same as fruitful marketing in one’s own country. Give great service. Build brand loyalty and goodwill. Have your workers be enthusiastic marketers for your organization. Give them ownership and access to higher levels of authority. Recognize the skillsets and experience they bring while bringing yours to them. Some companies are beginning to initiate training in very underdeveloped areas of the world. Those that successfully meet standards are able to create wealth that improves the whole family and community. The message given to the new internationals is, “You are valuable. If you give your best, we will give you ours”. This kind of mass loyalty growth will give companies stability in unstable areas of the world. This kind of international partnership will produce the next “mega-companies.”
Filed under: New Business in New Countries | No Comments »
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