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TerraFirma Strategy Overview - Expanding Globally
- 1. TerraFirma Strategy Implementing a Global Business Where Strategy Meets Reality Contact: msegal@terrafirmastrategy.com Terrafirmastrategy.com
- 2. Despite the recent trend toward isolationism, the horse has left the barn on trade; global business is here to stay • Growing consumer classes in countries across the world; 95% of consumers now live outside the US • Lower transaction costs enabling more and more sectors to sell globally • Reduced risk for exporters (e.g., export insurance) • Strong demand for US products; ‘Made in USA’ still carries a lot of weight • Increasing need for geographic and economic diversification Solid Quarterly Growth in Exports Continue… …Driven by strong underlying trends in international trade 2% 7% 6% 5% 8% 8% 11% 8% 3% 12% 7% 11% 13% 14% 11% 8% Q4 '16 Q1 '17 Q2 '17 Q3 '17 Q4 '17 Q1 '18 Q2 '18 Q3 '18 US World % Growth in exports over prior year Source: WTO www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 3. International business is complex - even the big guys can get it wrong Company Market Reason for Failure Japan • Japan was (is) primarily a cash-based culture • Ebay did not adapt payments to account for lack of widespread credit card usage China • Lack of store format localization (e.g., leasing space to local manufactures vs. completely store managed) • Warranty model (built into price vs. manufacturers warranty) Germany • Walmart philosophy / approach did not translate to German market, e.g… • Requiring greeters to smile at customers when they entered the store backfired as it was perceived as flirting • Groceries could be bought cheaper at local, more conveniently located stores Examples of Mis-steps in International Expansion Common theme: assuming fundamentals that work in the US will translate abroad www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 4. Why companies fail: Just about every key business process becomes exponentially more challenging in overseas markets Sample Business Process Key Objective Added Complexity Setting Up Shop Establishing required locations and personnel to support the business - Entity Selection - Tax Laws / Nexus - Recruiting / Employment Agreements Acquiring Customers Finding and onboarding profitable / desirable customers - FCPA Compliance - Credit Checks - Terms and Conditions Transacting Business Initiating a commercial relationship - Collections - Bad Debt Levels - Payment Processing Supporting Customers Quickly addressing customer inquiries, support requirements - Time Zones - Warranty - Language and Communication Tools Distributing Product Getting product to the customer quickly, efficiently and in good condition - Logistics / Incoterms - Customs - Commercial Agreements Protecting IP Preventing loss of critical intellectual property and protecting brand equity - Trademark Registration - Enforcement - Parallel Imports Successful execution abroad requires understandingand addressing all functional processes in the international context www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 5. TerraFirma helps companies accelerate international expansion by filling the gap between good strategic thinking and boots on the ground implementation 30,000 Foot View The Weeds • Big pie-in-the-sky strategy • Answers Key questions like where, when, and why, but misses the how The gap between strategy and reality • The daily grind that keeps the wheels turning • Leaves little time for longer term planning or strategic thinking • Pragmatic strategy • Critical process, policies across all functions that can either enable or inhibit growth • Requires prioritizing, focus, tracking, and oversight Informs the strategy Directs the effort www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 6. Sales and Distribution Product Development Customer Service IT HR Shipping and Logistics Pricing Technical Support Supply Chain Production Finance Operations Legal Marketing Communications Organizational Structure Just one example: Critical business drivers / inhibiters can take many forms across the range of internal business functions Freight Management Performance Metrics Tracking Tools Quote Management Packaging Requirements Incoterms Labelling Requirements Export Compliance Parallel Imports Pallets 1. Relevance: How Important is this to our success Internationally? 2. Capability: How good are we at it today? - Is it a competitive requirement? - Can it be a source of competitive advantage? - What is the customer expectation? - Is it a requirement for doing business overseas - What is the risk involved if we don’t do it / do it well? - How do we stack up against the competitive? - How well do we meet or exceed customer expectations? - How efficient / effective are we at managing the process? - How much room for improvement exists Function Driver Key Questions www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 7. Strategy: TerraFirma’s approach to strategy answers the big directional questions but with a constant eye toward the practical realities of implementation 200+ functional processes, policies, and capabilities that need to be in place to implement good strategic thinking - “The Drivers” The How TFS TerraPlanner www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 8. Planning: Doing the heavy lifting upfront on implementation planning can make the difference between success and failure abroad 1 2 3 4 Determine relevanceof functional business drivers Assess current capabilities for critical drivers Narrow focus to key gaps:highlyrelevant but low capability Developand executefocusedplanto fill gaps proactively TFS TerraPlanner www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 9. Implementation: Once a subset of critical drivers has been identified, a pragmatic plan around filling key gaps can be developed and acted upon 1. RACI – who owns what 2. Resource Requirements – time, people, capital 3. Dashboard – progress tracking and reporting 4. Timing – objectives, milestones The Playbook • Expedite Growth • Reduce Risk • Realize Synergies• Course Correct • Track ROI www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Draft
- 10. Services and Target Audiences www.terrafirmastrategy.com Contact: msegal@terrafirmastrategy.com Strategy Planning Due Diligence • Corporate Managers / CEOs • Diagnostic to determine readiness to execute on international growth opportunities • Stratgic planning and corresponding • Private equity • Commercial due diligence for potential targets focused on international readiness / upside • Portfolio assessment to determine which portfolio companies are best positioned for growth • Management consultancies • Extension of current service offering • Diagnostic to identify gaps and potential project opportunities (e.g., sales force effectiveness) Target Audiences Draft