STRATEGY & BUSINESS PLAN

More than 60% of SME pursue a gradual internationalisation. This internationalisation process is characterised by the increasing use of resources and uncertainty at each level. In each phase only limited risks are taken, with the company investing in phases and successively gaining experience that can be used for the further course of action. Many companies start with local sales partners before various locations are developed. In most cases, geographically and socio-culturally related markets are entered first and only with increasing experience companies risk to enter more distant markets.

Before entering new markets it is recommended to perform a critical analysis of today’s business model and the existing organisation. On the one hand, this shall identify one’s own strengths and weaknesses and, on the other hand, weigh up the opportunities and dangers of possible target markets. Only if the local customer needs and the advantages compared to the main competitors are known, the critical success factors and the strategic key challenges can be determined.

Basing on the company and market analysis, a promising market is identified, the product range is defined and a suitable market development approach is elaborated. Usually a gradual, sustainable market development is recommended.

LOCATION EVALUATION

With the market entry strategy it has been defined, which market will be actively worked on with which concept in future. So that the expected success is achieved in the medium-term the optimal choice of location is also decisive.

Depending on the purpose of the location other criteria are crucial and should also be weighted accordingly. For an export-oriented production the proximity to air- or seaports is decisive, while for a labour-intensive production a peripheral location with low wage costs for competitiveness is more important. When establishing a local development site, its proximity to renowned technical universities and the availability of qualified engineers and scientists are of great importance.

Thus clear and project-related criteria need to be defined for the location choice. The proximity to customers and availability of professionally qualified employees are usually the most important criteria.

COMPANY FOUNDATION

After the optimal location has been found, the foundation of a subsidiary can be initiated. The regulatory requirements vary according to location and purpose. The foundation of a sole sales organisation, a service or development centre is usually easier and completed in a much shorter time than the establishment of an assembly or production site. In any case the foundation of a local site is related to a high organisational effort. We support you in finding the suitable company structure and legal form for your business sector and accompany you in every step of the company foundation process.

In case of a company takeover or foundation of a joint venture renowned law offices with subsidiaries in Europe and the target market support us in preparing the contracts.

SETUP ORGANISATION

Simultaneous with the company foundation the structure of the future organisation needs to be prepared. It has to be clarified which success-relevant key positions (sales, technology, production, service, finance and administration) are necessary to be occupied at the start of the company. As personnel costs, along with goods purchases, are among the largest operating expense items, great care is needed in defining the organisation and recruitment.

The success of a new location depends mainly on the qualifications, experience and motivation of the new employees. These are to be bound to the company by means of fair remuneration and cooperative management.

In addition, all necessary work equipment must be evaluated and procured.

Interim Management

The development and management of a new foreign subsidiary requires a lot of management time, yet the traditional markets must not be neglected. Thus we support our customers and take over the interim management of new locations. This particularly also applies if the management is not having sufficient international experience.

Furthermore, experiences show that the achievement of cost-covering local sales takes longer, so that the fixed costs have to be kept as low as possible during the development phase. Thus also only the key positions shall be occupied by full-time employees.

MARKETING CONCEPT

When entering a new market, a company is often an unknown new market entrant and there is no confidence in the company or brand yet. Thus it is an important measure, to increase the brand’s reputation by targeted marketing measures to win the trust of local customers. Basically, the brand should be associated with recognisable and unique core competencies.

The market appearance is the calling card of a company and decisive for the image and the first positive impression. Attracting new customers, qualified local employees or efficient sales partners also depends on a professional market appearance. The investment in a clear positioning of the brand improves usually also the marketing in the traditional markets and thus pays off in multiple ways.

PROCESS OPTIMISATION

Before a company enters a new market, it must be ensured that the company can also be permanently competitive in this new market. Global competition, and in particular the emerging countries, have significantly increased competitive pressure on European companies. This growing competitive pressure should be addressed with an enterprise-wide focus on increased productivity, avoiding waste and streamlined, efficient processes.

For this purpose, all internal processes and procedures, as well as the related documents must be reviewed and optimised for the new market according to the principles of lean management. This may require a reorientation of production processes and management structures. It should also be considered that in new markets there is often a different understanding of standards (e.g. in terms of quality requirements).

DISTRIBUTION PARTNER

Whether a market entry shall be made by a qualified distributor or with an own distribution company depends mainly on the strategic importance of the market, the intensity of the level of consultation required for the products (e.g. customised solutions) and the financial resources available. If a new target market has a large market potential that can be opened up within a useful period and successful marketing requires in-depth product knowledge and close customer relationships, then setting up a local sales company often promises more sustainable success.

In any case, it is important to select a suitable distribution partner very carefully and according to defined criteria, as there will be a high dependency on the future partner. Therefore, potential partners should be systematically evaluated by various means (e.g. industry associations, trade fairs, networks, government databases, desk research) and evaluated according to established criteria before initial discussions with the best candidates are conducted.