As we approach the end of the year and many companies are in the process of assessing and planning, let me raise three major questions: \r\n
In his poem, “The Road Not Taken,” Robert Frost writes, “Two roads diverged in a wood, and I took the one less traveled by, and that has made all the difference.”
The global marketplace is literally a maze of untraveled roads and the “difference” can be unparalleled growth if the approach to selecting the right market is carefully executed with commitment, purpose and direction. However, taking the road less traveled requires a long-term strategy to define a product’s uniqueness and a presentation in a manner that distinguishes itself in a global marketplace. It’s more than just taking a national strategy and adding the word “international” on the front-end.
Whenever product modification is required, always opt for the adaptation which brings the most value to the targeted buyer with the least relative cost to the business. In other words, consider what market offers the greatest demand with the least amount of alteration to the actual product itself.
Going the road less traveled also requires a significant investment of upfront resources in terms of understanding the marketplace: understanding cultural habits and perceptions to help forecast buying habits; calculating expected sales volumes; anticipating trends; evaluating existing competition; and understanding the region’s overall economy. Beware, however, that this process may require unbiased and objective oversight and coordination by independent global experts who are skilled at anticipating issues because of their extensive experience operating in foreign markets.
In-sourced expertise can also improve communication between the company’s various departments and up the chain of command to senior management. From product development to marketing, sales and finance, each department will have an important role in the planning process. An initiative manager, experienced with international business and familiar with all aspects of the process, keeps each department focused on their tasks and prevents the teams from pulling too far in their own direction, which often leads to disaster. Ultimately, the focus must remain on prospective customers around the globe with different lifestyles and different worldviews, but with the same basic needs that drive consumers in the U.S.
Avoid the Pitfalls in the Road
Selecting an effective competitive strategy requires an organization to bring unsurpassed value to a targeted audience. Hence, it is vital to understand the concepts of value, needs and desires from the perspective of the targeted marketplace. After all, “value” is a relative term. Only then can the company begin to evaluate both the options and feasibility of aligning its expansion strategy with the needs and desires of any particular region or market. Still, the road to global expansion can be perilous and warrants close examination of common challenges faced by many businesses that have led the way internationally.
Oftentimes, the challenges result from unclear strategic direction, inaccurate assessment of risk and inconsistent alignment between vision, mission, resources, strategy and operations. Consequently, companies need to continually monitor their internal structure and domestic operations and align both with global strategies. Another common stumbling block is cultural ignorance. It’s critical to know the customer! Does this culture eat out or in; walk or drive; are the women at home or working; do they discard and replace or do they repair; do they shop online or in stores; are they brand loyal or not; and who in the family makes purchasing decisions?
Second, make sure all employees are aware of the global vision, understand it and accept it. It is also necessary to design international programs that appeal to your global customers, and that there is a cultural fit in terms of values and product design.
Finally, assess risk, but focus on opportunities. Part of assessing risk is understanding the region’s legal environment. Here’s an example: In the U.S., Lands’ End possesses a strong competitive advantage through its pledge to stand behind quality and offer a lifetime guarantee on every item it manufactures and sells. However, when it attempted to duplicate that strategy in Germany, it was quickly rebuked by the German courts. Such a guarantee violated German law, which prohibits companies from offering incentives with purchases that can cause unfair competition. Fortunately, in this instance, Lands’ End was able to turn the incident into an international marketing campaign. But, the company is still prevented from directly telling consumers about the lifetime guarantee unless directly asked. This is an important lesson. Remember, success in the home market is not a guarantee of global success.
Make sure the expansion doesn’t get “a life of its own,” and that good money doesn’t follow bad.
No time for long-term planning, BUT all the time in the world to live with the consequences. True or False?