Enhanxit international business development
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Enhanxit international business development

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Enhanxit international business development Enhanxit international business development Presentation Transcript

  • International business development How we grow your business Business Development Strategies
  • Content What we do 3 Introduction 4 Common questions 6 Objectives 7 Strategic decisions 8 Organizational structures 23 Where we are 27
  • What we do Through a Tailored Business Development Outsourcing Strategy, a Network of Local Expert Partners and dedicated Sales Channels, we help our Customers extend their Business in a Cost Effective and Efficient way, without the need of Investments in Local Infrastructures.
  • Introduction What’s the best way to enter a new market or increase performance in your existing markets? You can build your own sales force to sell directly to customers, normally the more expensive option if you’re expanding to other countries or remote areas, or you can use an indirect channel partner strategy to reach customers. The decision is based on a number of factors, including cost, speed of go to market, control, support requirements, and access to wider market opportunities. How companies sell is as important as what they sell. In an environment where companies are selling similar products and services at comparable prices with a similar cost, the Sales Channel has become a source of sustainable competitive advantage. Selling becomes a question of how to take your products and services to your customers via the best combination of sales channels—the direct sales force, distributors, agents, retailers, and the Internet. Indirect channels can provide a cost-effective supplement to a direct sales force. Direct and prompt market information is very important for effective decision-making. Channel partners are in the best position to understand the local markets. They know the customers and they know why prospects are dealing with competitors. They can identify changes in the marketplace and respond quickly in a way that you may not be able to match.
  • Introduction Globalization The world is becoming smaller and the competition from the exterior is increasing day by day. Customers are able to make more informed decisions with up to date information and their loyalty to their regular providers is decreasing. This is the well known phenomenon of Globalization. Companies are now not only competing with local players but also have to compete with companies from the exterior trying to make their way into the (your) market. But the knife cuts on both ways, the Globalization brings many opportunities to expand business to new areas. Due to the Globalization, expanding business internationally is no longer a privilege for big companies with big bank accounts. The “micro-multinational” is a phenomenon that is here to stay. Don’t get us wrong, international expansion is not easy, it’s a complex decision that is not free of risk. The rules are different and we don’t know the business environment. Going international creates a lot of doubts and questions and calls for a smart and well thought strategy to avoid putting the company at risk.
  • Common questions The most common questions that arise in a first analysis of international expansion are: • Where do we go? • Which products or services are most suitable for international expansion? • Should we first go to countries that are close or that are similar to ours? • How do we choose the countries we have to go to? • How do we enter the market? • What mechanisms for go to market exist? • How do we decide which mechanism to use? • Do we invest in infrastructure or do we surge local collaboration? • How do we organize the company internally? • How do we control our activities? • and last but not least, how much do we have to invest?
  • The objectives Our objective is to guide our customers through the process of international expansion and help them grow on international markets in a cost effective and smart way. In the end, after the process, we want our customers to stand on their own feet and run a successful international business. Once we guide our customers through the process, set-up a sales structure and take their business to profitability our part should be over and our customers will be able to: • Determine the correct product/market combination, where to go and how to enter. • Be familiar with the different go to market mechanisms and be able to choose the right one in each situation. • Analyze market conditions based on internal and external factors. • How to adapt the organizational structure. • Be familiar with the management and control mechanisms available in order to choose the correct collaboration model.
  • Strategic decisions Product/Service Selection The product/service selection is one of the critical elements in the decision taking process. We will analyze all products/services in order to take a decision which product(s)/service(s) are most suitable. Our process will be based on the following main elements: • The performance of the product/service on the domestic market. • Benefit forecast. • Ability to increase production in a growing demand situation. • The ability to commercialize the product/service in a similar way as on the domestic market. The product/service should offer different advantages in order to obtain an acceptable market share on other markets. The advantages can be from a lower price to the increase of added value for potential local customers and have an edge over the competition.
  • Strategic decisions Product/Service Selection As we said before, the product/service decision is a critical process. During our analysis we will raise, amongst others, the following questions: Level of competitiveness on Is the product/competitive on the domestic market? the domestic market Which are the strong and weak points? Satisfaction of market needs Which needs does the product/service satisfy? Do these needs exist on the new market? If they do, which product/service is fulfilling them now? If they don’t, could our product/service fulfill these needs? The use of the product / Are the conditions of the use of the product/service the same as on the service domestic market? Complementary services Does the product/service need post-sales services? Are they available on the new market? If not, how do we organize them? Product/service adaptation Is it necessary to adapt the product/service to the new markets’ conditions? Sales Channel Can we sell our product/service in the same way as on the domestic market? Who takes care of selling our product/service?
  • Strategic decisions Product/Service Selection In many cases it’s necessary to adapt or extend the product/service to meet local necessities (could even be legal obligations): • Language • Legal • Technical • Health • Climate • Etc. We highlight two main strategies in the product/service adaptation: Product standardization We consider the entire international market as one market. The same product/service will be used to enter multiple markets. We will use marketing and advertising to adapt the need of the potential customers to the product/service as there will not be any investment in the adaptation. In this strategy it is essential to have a price that’s below the market standard.
  • Strategic decisions Product/Service Selection Product adaptation We identify multiple international markets for which we adapt the product/service configuration in order to ad more value. The cost for adaptation will be higher but the effort for marketing and advertising will be minimum. Normally the price of the product/service will be higher as the market standard but there exists a high level of added value.
  • Strategic decisions Market selection Once we’ve identified the products/services we want to export we have to identify the market(s) we want to go too. Preliminary evaluation Our first objective is to identify those market which fulfill a minimum of requirements for the in- dept evaluation. In this phase many customers commit two common mistakes: • Exclude countries far away from the domestic markets but have potential. • Invest to much time in analyzing countries with no potential but that are close to the domestic market. For the evaluation process our customers have to start from zero, without any prejudgments. It has been proven that this is the only way to make the right decisions.
  • Strategic decisions Market selection Preliminary evaluation The preliminary evaluation should not be an extensive process. In this process we use information to estimate the external condition of our target markets. The indicators used to estimate the market situation are based on economical and social information of our target markets. • Country specifics (political, cultural, language, etc.) • GDP • Per Capita Income • International commerce laws • Past and future evolutions Once we have created a short list with potential countries we will conduct a more in-dept evaluation in order to choose the countries most suitable for our product/service.
  • Strategic decisions Market selection In-dept evaluation Now that we have generated a list of potential markets we will conduct a more in-dept evaluation. We have to keep in mind that a potential market should be one that has a medium and long term forecast for growth and profitability. The indicators we use for the in-dept evaluation: • Industry forecast for the coming 3 – 5 years. • Conditions to enter the market (taxes, political, etc.). • Competition. • Profile potential customers. • Volume customer mass. Apart from these standard evaluations we will conduct a historical study of the industry, objective of our product/service.
  • Strategic decisions Strategic positioning Now that we have the product/service and the target markets we will determine the strategic positioning for the selected market(s). If we go to more than one country we have to keep in mind that we might need more than one strategy. The positioning of our customers companies is based on two main factors, internal and external. Internal factors • Product/service • Company capacity • Financial resources • Other internal resources (HR, I+D, etc.) So, within the internal factors we’ll study the product/service specifics as well as the company specifics.
  • Strategic decisions Strategic positioning External factors • Strategic position of the competition • Potential customers • Sales • Distribution • Technological innovation Among the external factors the competitors strategic position, customer preferences and the possibility to differentiate in different segments are essential. Within the positioning we highlight two main strategies: • Leadership in costs, offer standardized products/services at a lower cost. The quality of the product/services is normally inferior but at a reduced price. • Leadership in differentiation, offer products/services with added value compared to the competition but at a higher price.
  • Strategic decisions Go to Market Mechanisms Once we decide to enter a market we carefully study the best way to move ahead. We consider different mechanisms to enter a market: Export / Outsourcing • Reduced financial risks. • Reduced initial costs. • No investment in fixed assets. • Offers the possibility to experiment. • Normally the first logical step.
  • Strategic decisions Go to Market Mechanisms Contract or License agreement • Reduced initial costs. • Limited duration. • Product know how in external hands. • Reduced control over the process. • Only for companies that hold patents. Investment in the exterior • Not the usual first step in the process. • We suggest to do this further along in the process. • High financial risk.
  • Strategic decisions Go to Market Mechanisms The go to market mechanism is an important step in the process. We recommend to collaborate with local experts. Nobody has more know how about a market as local companies, experts in business development in their territory. We consider several main factors that affect the decision on how to go to the market: • Market situation of the target. • The environment of the target. • Productivity of the target. • Productivity of our customer’s company. • Resources and commitment of our customer. It’s important to consider that the profitability is not the only approach, this will be inexistent during the first months.
  • Strategic decisions Go to Market Mechanisms We advise our customers to use a mechanism that reduces the risks to a minimum during the startup period. Further ahead, once familiar with the new market there will be a change of strategy as a result of the evolution of the company on the market. We identify four main steps: Direct Sales from the domestic market • Receive sales orders from international buyers (internet sales). • Possible existence of a sales representative in the exterior. • Little or no compromise with internationalization by the company. • Not the usual step if the company wants serious presence in the exterior. • Only suitable for internet businesses.
  • Strategic decisions Go to Market Mechanisms Strategic Alliance • Logical first step in internationalization process. • Agreement with local expert companies in business development. • Separation of domestic and external markets. Joint Venture • The risk is spread between local and external company. • Combined investments. • Unified strategy. • There still exists a difference between the domestic and external market.
  • Strategic decisions Go to Market Mechanisms Multinationalization • High risk, but the company has an in-dept knowledge of the market at this point. • Investments in fixed assets and resources in the exterior. • Domestic and external market strategies are integrated. • This is the final objective in internationalization.
  • Organizational structures There is not one unique way to organize the company for internationalization. Every situation calls for a different structure. Furthermore it also depends a lot on the current structure of the company, there are no two companies exactly the same. So, we’ve developed a series of variables that can condition the type of structure: • Volume of sales in the exterior. • Experience of the company. • Size of the company. • Variety of products/services. • Number of target markets. Along the way of internationalization, companies tend to change from one structure to another based on the evolution of the process.
  • Organizational structures We identify three main organizational structures: Functional structure • Of all the structures, this is the most simple one. • All activities in the exterior are concentrated in one department or person. • This department normally depends on the commercial direction or general manager. • This the best structure for starting companies. Divisional structure divided by geographical areas • Structure for companies with an advanced level of knowledge of the external markets. • The company divides the market in geographical areas (Europe, ASEAN, America, etc.). • The territory managers are responsible for all products/services in their area. • More suitable for larger companies.
  • Organizational structures Divisional structure divided by products/services • For companies with intense multinational activities. • Each manager is responsible for the products/services in all geographical areas. • More suitable for larger companies. • There could exist sub-responsibilities depending on the amount of products/services involved.
  • Organizational structures Evolution of the organizational structure during the internationalization: Phase International Strategy Organizational Structure 1 No international strategy No formal structure 2 Initial stage of internationalization Department or manager responsible for international performance 3 Entrance in several international markets Divisional structure (geographical or with several products/services product based) 4 Strong global presence, integrated Extensive organizational model based strategies on combinations of geographical and product division
  • Where we are Spain Italy France Singapore Germany