Lessons in global expansion

For industrial companies, global expansion offers the promise of opening up new markets and opportunities and is often a natural next step after home market success and stability. The value a company creates in its home market can be applied to customers around the world. However, expanding globally comes with its own challenges and success can’t be achieved overnight.

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At AS-Schneider, we use our 140 years of experience and knowledge in manufacturing and providing instrumentation valves, manifolds and accessories to develop tailor-made solutions for customers around the world. Having expanded globally over the last six years, we have successfully grown our presence and brand and learned a number of lessons along the way, some of which I would like to share.

Moving into a new market requires in-depth preparation, investment and research in order to understand the challenges that will likely be faced in each new market; including cultural, operational, legal and logistical.

Companies that overlook or treat the challenges lightly can make expensive mistakes. Those that successfully internationalise do so via combining practices that have built their success in home markets, with business practices for each new market that best delivers value in the context of the new market.

Market intelligence

Global expansion is a balancing act for many companies between: knowing what should stay the same to ensure consistency across operations and brand and what to change in order to fit in and be successful in the new market context.  Localizing operations to fit with the local norms of doing business requires a deep understanding of accepted business practices, cultural norms and the relationships necessary to ensure sales and effective delivery of value to customers.

Global operations also means managing a more complex financial landscape. Forex, repatriation rules, taxation, and accounting standards are all new elements in the financial management of the business.  Delivering a successful project to a customer only to have profits eroded by exchange rate volatility is disheartening. Experienced global operators identify their risks and develop mitigation strategies and tactics they can deploy when faced with emerging risk.

In the oil and gas market, there are industry practices and technology that is deployed globally. Multinational oil companies have long been global and are well-practiced at deploying best practices systematically through their many operations. The unique business cultures in key oil markets have long required oil companies and their suppliers to learn how to best operate in other cultures, and the institutional knowledge about what works is a valuable asset that all global companies have had to develop as they ventured into foreign markets.

Adapting to your customers’ needs

Many companies try to think globally and then apply locally to achieve operational scale economies. However, what might work well in one local market might not be useful, appropriate or as valuable in another. Adapting to fit the specific needs of each market is an essential part of any globalisation plan. A popular example of global success through adaptation is Starbucks. Recently expanding further into China with 500 stores, by adjusting to the local environment through both development of its speciality tea brand and delving into e-commerce to play on the popularity of digital technology, it has delivered on its ambitious growth plans.

High quality customer service

In the range of industries we work across, which include the chemical industry, power plant construction and oil and gas, our ability to understand local regulations and the context in which they are applied, helps AS-Schneider deliver solutions that deliver our global best practice in product application and service delivery. Our global operations help us to best advise customers on how to optimise both global and local standards and regulations and develop tailored solutions for local and export markets.

At AS-Schneider, we pride ourselves on having a close relationship with both our customers and partners. One way we make sure to support our customers is through tailored in-house training. From scheduling right through to addressing the challenges associated with each application, we make sure to seek and implement appropriate solutions by closely collaborating with our customers from specification to installation, to training and support operations to help them succeed and ensure maximum value.

For example, to reduce costs for on-site assembly at end-users location, we can build up the entire hook-up or instrumentation hardware (pre-assemble and test the valves, manifolds, tubing, transmitters, etc.) in our factory and ship it fully pre-assembled. This means that on-site the construction team only needs to connect the assembly to the process line, significantly reducing the on-site assembly and testing.

Knowing the challenges

One thing I’ve learnt is that trying to solve a problem you haven’t experienced first-hand is far more difficult. A key factor in AS-Schneider’s success abroad is our direct and sustained engagement with customers in the local market. The knowledge we develop serving customers in Singapore remains within the organisation and we share it to the relevant engineering and service groups, incorporate the next entities such as Dubai without having to go through another ground up learning curve.

On a personal level, the effort I made to better understanding the local challenges and cultural differences helped me to better manage my staff and understand the operational and market challenges they faced. By being directly involved and learn first-hand, I was able to build trust and form a strong team bond, while imparting my knowledge of the products and value they can deliver.

Get to know your competitors

Understanding your competition is vital. Completing a detailed evaluation can help companies determine their strengths and weaknesses, gaps in the local market, and enable your company to develop durable competitive positioning. You may have competitive advantages in your home market, but your competitors also bring those competencies from their home market. In both the short and long-term building a strong value proposition that customers associate with your brand, is an critical priority in profitable expansion to new markets.

Controlling logistics

The logistics of expanding abroad can be a sticking point for many organisations, especially those selling physical products. For example, shipping each order one by one from your home country can result in overly costly shipping fees, but setting up local distribution centres could also be too expensive to justify.

This is where working with a partner in the region can be invaluable, especially if you anticipate large volumes of international orders from a number of countries. Having a supply-chain partner, which has a presence in those markets can allow stock to be based closer to customers and reduce the upfront investment needed to enter the markets. Our most recent joint venture with Binzagr has allowed us to tap into the Saudi market to provide our high quality, German engineered products, to local customers even faster and more extensively.

Key takeaways

When making investments in new regions, remember that research is your friend. Don’t rush the preparation stages, as this could make or break your whole business venture. We attribute our success abroad to our employees, by being hands-on in the new environment and taking time to understand the customer’s’ needs. Our managers make it a priority to work with the cultural differences of new employees, integrating them into our family while tapping into their local market expertise.

With an international network of subsidiaries and partners in more than 20 countries, AS-Schneider has a wealth of experience in international business. Want to discuss this topic further? Leave me a comment and I’d love to chat.

Originally posted on LinkedIn on September 28th, 2017

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