24 Feb bad international strategies
Here are examples of the worst international business strategies we’ve seen.
• Follow the client — How many times do we talk to firms that decide to enter a market because their client is doing so? What happens if you lose the client? Does that mean you are stuck in Turkey with no other business? While making clients unhappy is unpleasant, and losing clients even worse, it’s better to commit to a market than just a client.
• Since we speak English, let’s start with an English-speaking country — Are we just too lazy to learn another language? Do we want to cut out a better market opportunity in an English-speaking one? It’s far better to go where the prospects are the greatest, regardless of the language spoken (most of your counterparts have some working knowledge of English anyway).
• Assume Canada is just like the United States — The first thing one may notice in Canada is that the cereal boxes are in two languages. You might hear wacky terms, such as “province” instead of “state.” Canadians prefer long-term business relations. Canada is one of the most U.S.-friendly countries out there, but is still a different culture.
• Sell out of our bag — When you limit your offerings to one or two items, you’ll fail if they new market rejects them. You must be willing to modify what you have, and adapt pricing, promotion and distribution strategies as well.
• Send the wrong people — The correct people must understand the game they’re entering. They must have enough rank and support to educate a firm and modify strategy. They must be able to deal with a country’s hierarchies and structures. They must be patient, and willing to learn. Yet they must be credible business people to accomplish company objectives. When you need a graybeard to enter a market, you send a graybeard.
• Pick the biggest market — Again, the biggest market may not be the best opportunity. You may not be able to compete with entrenched players there. The market may not have a “fair play” atmosphere. For example, Germany’s beer market is fragmented. While they may drink more beer per capita than anyone else, the Germans’ alliance is to small, local breweries.
• Sell first, research later — This can be disastrous on business trips, as you have only one chance to make a first impression. It also shows the people you are dealing with that you haven’t done your homework, and hence, aren’t committed to their market.
• Hand over the intellectual property — IP is a corporate asset, and has a value. Selling the IP makes sense only if you aren’t worried about creating a new competitor. Many firms overseas pose as buyers to get IP from their competitors. If local law mandates that your IP becomes part of a market entry strategy, then choose your partners slowly and carefully.
• Switching partners when there’s a problem — This is always difficult. It seems that in every industry, everyone knows everyone. And foreign firms and joint ventures are very visible.
If we really take our time to get to know our partners, and provide them the proper support, then there shouldn’t be a need to keep changing those relationships. And many others who know of your failed marriage may not want to work with you anyway.
• The three-team approach — U.S. firms like to send in a research team, a negotiation team and an implementation team. This strategy is flawed for many reasons: Relationship-building is a key activity to international deals, there’s no champion in-house to follow the progress and communicate effectively to the company, and it simply confuses many Asian companies. It also shows no personal commitment by any of the players.
• Find a partner who does what we do — So if the U.S. firm makes dial tones, and the Ukrainian firm makes dial tones, then adoption of the U.S. technology means all the Ukrainians lose their jobs? Better to find a partner that complements (not directly competes with) our services.
• Assume we have Europe covered because we have a person there — Europe has about 1 billion residents. And one person with a briefcase will cover it?
• Use our in-house people who know our business — They may know your business well, but do they know your new market? Do they know the players? Do they know the nuances of international market entry? Do they know how to negotiate in foreign countries? Will they educate your firm properly as to the problems they encounter and how to fix them?
• Make no investment — This is the worst of all. Firms must invest people, time, education and often money to get into a market. Firms must realize that our counterparts overseas often see us as exploiters, who know nothing of their country or culture.
Avoiding these strategies increases your chances of succeeding as you enter a new country’s market.