MSG Short Case Study: Exploring New Global Business Opportunities Oyedele, A. University of the Incarnate Word, HEB School of Business, San Antonio, TX Goenner, E. Saint Cloud State University, Herberger Business School, Saint Cloud, MN Due to shifts in the market, a U.S. small and midsized firm began looking for a strategic outsource partner to fabricate plastic and rubber pieces for use in its waste-water products. The company wanted to expand into an international market. MSG wanted to work with engineers in the expanding market the president, John, was very egalitarian and wanted to work with engineers who would collaborate to add value to the company’s products. John had questions about how his group could improve and wanted to form a working partnership with another company and group of engineers. The company considered three markets: China, Brazil and Mexico. A very technically sophisticated company, MSG quickly determined China was not a good fit for its expansion. MSG wanted to work with engineers in the expanding market to improve its main product, a membrane used to clean water. In China, MSG was unable to directly talk with engineers but had to work through a gatekeeper in the Chinese company. MSG was uncomfortable with this hierarchy and decided the obstacles to working with Chinese engineers were too great to overcome. Brazil was another market considered, but logistics and taxes made it unappealing. A major partner in MSG, Jerry, went to Mexico to explore options and visit potential suppliers. He returned after making contact with two potential partners that could supply equipment and with whom MSG could negotiate prices. Further, Jerry made some connections with company engineers and was very excited about their skills and suggestions. Mexico was also attractive because of trade agreements with the U.S., such as NAFTA, low or no taxes. Product costs were more competitive than in other markets and logistics and proximity made it an easy fit with the U.S. company. Research, 2013 Aware of the need to understand different cultures, MSG hired a Mexican native to conduct research to find customers. After several months, they made contact with, and began a relationship with, a Mexican industry association, RSA. RSA was led by a resourceful, aware and dynamic man named Dr. Baez. He gave MSG access to contacts and made suggestions for developing a market. His high level position in the industry association meant he had many contacts in the industry and he provided invaluable advice and information for MSG. First, Dr. Baez told MSG it should host an industry seminar to attract potential customers and engineers; “This is what you should do,” he said. So, MSG followed his advice. Working with Dr. Baez, MSG the company planned a seminar through an industry association, ATT. This was a major break-through for MSG. Dr. Baez encouraged many end-users, enginee.

1. MSG Short Case Study: Exploring New Global Business
Opportunities
Oyedele, A. University of the Incarnate Word, HEB School of
Business, San Antonio, TX
Goenner, E. Saint Cloud State University, Herberger Business
School, Saint Cloud, MN
Due to shifts in the market, a U.S. small and midsized firm
began looking for a strategic
outsource partner to fabricate plastic and rubber pieces for use
in its waste-water products. The
company wanted to expand into an international market. MSG
wanted to work with engineers in
the expanding market the president, John, was very egalitarian
and wanted to work with
engineers who would collaborate to add value to the company’s
products. John had questions
about how his group could improve and wanted to form a
working partnership with another
company and group of engineers.
The company considered three markets: China, Brazil and
Mexico. A very technically

2. sophisticated company, MSG quickly determined China was not
a good fit for its expansion.
MSG wanted to work with engineers in the expanding market to
improve its main product, a
membrane used to clean water. In China, MSG was unable to
directly talk with engineers but had
to work through a gatekeeper in the Chinese company. MSG
was uncomfortable with this
hierarchy and decided the obstacles to working with Chinese
engineers were too great to
overcome. Brazil was another market considered, but logistics
and taxes made it unappealing.
A major partner in MSG, Jerry, went to Mexico to explore
options and visit potential suppliers.
He returned after making contact with two potential partners
that could supply equipment and
with whom MSG could negotiate prices. Further, Jerry made
some connections with company
engineers and was very excited about their skills and
suggestions. Mexico was also attractive
because of trade agreements with the U.S., such as NAFTA, low
or no taxes. Product costs were
more competitive than in other markets and logistics and
proximity made it an easy fit with the

3. U.S. company.
Research, 2013
Aware of the need to understand different cultures, MSG hired a
Mexican native to conduct
research to find customers. After several months, they made
contact with, and began a
relationship with, a Mexican industry association, RSA. RSA
was led by a resourceful, aware
and dynamic man named Dr. Baez. He gave MSG access to
contacts and made suggestions for
developing a market. His high level position in the industry
association meant he had many
contacts in the industry and he provided invaluable advice and
information for MSG.
First, Dr. Baez told MSG it should host an industry seminar to
attract potential customers and
engineers; “This is what you should do,” he said. So, MSG
followed his advice. Working with
Dr. Baez, MSG the company planned a seminar through an
industry association, ATT. This was
a major break-through for MSG. Dr. Baez encouraged many
end-users, engineering firms,
suppliers and governmental agencies to attend the seminar;
these contacts were essential for

4. MSG’s entrance into the Mexican market.
MSG successfully identified a major player in the waste-water
market in Mexico and began to
develop a relationship with him. Because of his advice, they
funded and hosted a seminar that
attracted over 100 attendees. MSG was pleased with this
success; paying for cocktails seemed
like an inexpensive way to access customers.
One major contact made at the seminar was with the president
of an engineering firm, HBO, that
was a pre-approved supplier of many waste-water treatment
facilities. Ronaldo, the HBO
contact, would prove essential to MSG’s success in the region;
he lined up meetings with
additional potential clients. Further, Ronaldo’s son was the
president of the Mexican Water
Association, one of the biggest potential clients in the area.
Progress, 2014
The relationship with HBO gave MSG an entrance into the
waste-water market. Using contacts
Ronaldo suggested, MSG volunteered to install water testing

5. units at several plants. Free of
charge, the testing units would gather data about the efficacy of
MSG’s products and show users
how useful its membranes were. MSG believed that once
companies saw evidence, from their
own plants, of the new membrane technology’s effectiveness,
sales would begin in earnest.
At the same time, MSG was trying to develop a dealer network
and find a company to work with
on joint market development. MSG wanted to bring its
technology, which was new to the
Mexican waste-water industry, to the market; it would provide
consulting services, maintaince of
the system and testing services. A Mexican company would
provide many of the components
needed for success. Its engineers would help with plant size
and chemical issues. It could
supply components such as plastic piping and assist with direct
sales. The Mexican company
would help with building and installing new systems and
maintenance of the chemical
components needed. It would straighten the supply chain to
possible end users; together MSG
and a Mexican company could build solutions together.

6. MSG’s president, John, and HBO’s president, Ronaldo, worked
well together. Both were willing
to take risks and encouraged change. John asked why Mexican
end user wanted to pay high
amounts for systems with inferior technology. MSG offered a
key component, a new membrane,
that would improve the effectiveness of the waste-water
treatment plants. John and Ronaldo
conducted several meetings about strategies to help MSG find
an outsource partner who would
do the plastic piping and other components and ship product to
customers. After about a year of,
Ronaldo’s company signed a collaboration agreement with
MSG. They agreed to collaborate
including orders for 40,000 waste-water membranes.
Challenging the Industry, 2014
One of MSG’s major challenges was its product, the new
membrane, was new to the Mexican
water industry. In addition to trying to forge bonds with new
companies, MSG was attempting
to basically change the entire industry by introducing foreign
technology. The government set a

7. standard for water cleanliness and municipalities just bought the
standard membranes. People
were unaware of the new technology MSG was bringing in from
the U.S. and didn’t see the
value in it.
Problem and Value Proposition
MSG saw systemic problems in many waste-water systems. For
example, in areas with highly
acidic water, the standard membranes did not last, requiring
frequent replacement. In some
places, the standard membranes were not compatible with the
chemical components of the water.
MSG’s new membrane technology was its value proposition. It
offered membranes tailored to
different conditions. The company’s testing allowed for
customization of membranes, chemicals
and systems that would ultimately save municipalities money
and provide cleaner water.
Target Market
MSG believed targeting private industry, where companies
would quickly see the cost savings,
was the key to making sales. Profit driven private industry may
be more likely to implement

8. change than the municipalities that are uninterested in
something new. However, even private
industry wants a history of success before it is willing to
change. This industry wants ten or
more years of data before it considers a change a success. Since
MSG has only been operating in
Mexico for less than one year and has relatively little long-term
data to support its claims, it
faces significant resistance to change. MSG needs to find a way
to address the history-based,
slow to change culture of the waste-water industry in Mexico in
order to be successful. HBO
worked largely with municipalities, the local government units
in charge of local waste-water
treatment plants. So, MSG invited the municipalities to work
with them to build solutions
together. MSG offered its consulting services and well as
collaboration on testing and
maintenance of the new systems.
Business Development
Working with Ronaldo, MSG bid on several million dollar
projects. For example, in the state of
Durango, a company named OSTE was upgrading its system. At

9. the time, it had a vast array of
holding tanks and a layout that used the local climate to assist
in cleaning the water. Water
moved through the entire layout over several days while subject
to bacteria that naturally
removed pollutants. MSG believed it had a better solution.
Using a mere quarter of the space
and its new system, MSG could deliver a better quality system
with top quality water.
When developing its proposal, MSG insisted OSTE needed top
quality product and outcome and
their latest, newest technology was the way to achieve that.
MSG suggested a smaller system
that would require extensive revision to OSTE’s current
infrastructure. But, OSTE didn’t want
that. OSTE wanted a solution to fit into its existing system at
the lowest price possible. The
water-cleansing layout currently in use took advantage of
climate, nature, time and bacteria to
cleanse water of impurities and OSTE was not concerned with
many of the aspects of the system
that MSG was promoting.

10. MSG spent much time and money developing a proposal for
OSTE. Representatives met with
the director to discuss OSTE’s needs and concerns. OSTE
didn’t want to purchase an entirely
new system, so MSG worked to divide the new system into a
staged project to accommodate
OSTE’s budget needs, address supply chain concerns, explain
and demonstrate efficiency. MSG
insisted the old system was oversized and outdated and its latest
technology would be far
superior to OSTE’s current system despite the extensive
infrastructure revision it would require.
MSG lost its bid for the $3 million project. The company that
won the bid gave OSTE exactly
what it wanted at a price it could afford.
Successful Steps in Entering the Market
MSG made many steps toward success that other companies
should emulate. First, MSG did
extensive research both about which market to enter and about
the market it decided to enter.
MSG hired a Mexican native to work with the company and
make contacts in Mexico. A
company representative with deep cultural knowledge is
essential to entering a foreign market.

11. Next, the company formed key relationships with Mexican trade
associations. Using trade shows
and seminars, MSG formed relationships with key players in the
waste-water industry. It is
essential for a company to identify relevant and influential trade
associations, network with those
players, and form alliances with strategic partners. Without
support of key industry players,
MSG would have failed to even bid for projects. Listening to
local partners is essential for
success.
Potential Errors in Entering the Market
One of MSG’s major challenges was its product was new to the
Mexican water industry. Locals
were unaware of, and uninterested in, the new technology MSG
was bringing in from the U.S.
So, in addition to trying to forge bonds with new companies,
MSG was attempting to basically
change the entire industry.
MSG failed to trust the local customer. OSTE told MSG what it
wanted but MSG didn’t listen
and didn’t offer what the customer wanted. MSG wanted top
quality by using the newest

12. technology when that was not the right solution for the
customer. MSG has technology that
works but relying on that technology to sell product was not
working. The new system was too
expensive, unproven and too difficult to maintain. There wasn’t
congruence between MSG and
OSTE’s goals.
MSG failed to understand its customer, or to listen to its local
partners. Ronaldo tried to tell
MSG the client didn’t want the technology being offered. But,
MSG was afraid of appearing like
another U.S. company that came in and failed or “didn’t do it
right.” MSG believed it knew
“better” than the customer and trusted it could convince the
customer its way and technology
was better. Ultimately, this hubris resulted in failure. By not
really understanding the local
customer, MSG wasted large amounts of time and money.
The company leaders impact the relationships with local
partners and must be constantly aware
of the ways in which they interact with them. For example,
John and Ronaldo’s relationship

13. started strong but deteriorated over time. John insisted Ronaldo
and his organization needed to
“think outside of the box” and see the benefits of the new
waste-water technology MSG was
offering. He insisted the testing and use of MSG’s system
would prove his way was superior.
Ronaldo responded “you don’t think outside of your box.” He
insisted MSG was too focused on
its goals and failed to understand the local systems and how
they worked. Ultimately, this rift
affected the business relationship between the two
organizations.
Perspective on obstacle to success
The biggest obstacle to success is the unwillingness to deal with
perceived differences. Other
factors include not taking the market seriously and not listening
to what the customers/people
want. Entering a foreign market is difficult and complex and
sometimes companies are unwilling
to face those difficulties, to face the fact of the way a market is
and works versus the way they
perceive it to be and work.
For example, some companies deal with “the three day wonder.”

14. Sometimes a company will
enter a market looking for transactions instead of relationships.
They find a partner and make an
agreement. When the company returns to complete the
transaction, the partner is nowhere to be
found. The leaders were “not wired” to do business abroad.
They refused to meet with people in
Mexico and build the relationships needed for success
MSG thought they had a “story to tell” and that would be
enough to convince Mexican
companies to buy their product. They didn’t listen to the
information about the audience and
decided to pitch their story. MSG went in with little data,
numbers that the customers wanted.
They had too much pizazz for the audience that was very
practical. It took a while for MSG
management to get past their opinion of the market and what it
needed, a time during which one
of its employees worked hard to keep the lines of
communication between MSG and Mexican
companies open. MSG eventually muddled through and met the
needs of the customers.
Provincialism & Cultural Perspective

15. The case of MSG has revealed the idea of a provincialist
mindset, which we identify as an
assumed singularity of thought. Each person has an assumed
thought structure that shapes and
limits the way in which they see the world. A person with a
strong provincialist mind-set will be
less successful in foreign markets because of a tendency to
revert to his/her original thought
orientation.
When US managers enter new foreign markets without seeing
the cultural milieu, they often
believe their product is best. They fail to understand the
nuances of a foreign culture because of a
provincialist mindset. They see the world through their own
worldview, which colors all they
see and understand.
To be successful, companies should hire local partners who
understand the details of the local
culture. This means a US manager who goes to Mexico hires a
Mexican liaison that has an
orientation of how things are done.
We define provincialism as a singularity of thought and a strong

16. tendency to return to the
thought patterns of one’s origin.