Rod Smith is Chief Information Officer for Victorian State Government and Director of Strategem Management Consultant, a management consulting firm dedicated to providing management solutions and business coaching services for enterprises in commercial and government sectors. Although this isn’t typical of what you find on my blog, Rod has shared some valuable insight into getting products to an international market, and I’m sure there’s someone reading this who will benefit.
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Australian |
Having recently returned from an overseas delegation visit to Singapore and India I have given some thought to the opportunities and some of the pitfalls of establishing overseas markets for Australian companies.
There has been much discussion recently over the free trade agreements Australia has negotiated (eg China, and Trans Pacific). Despite all this talk of opportunities for Australian companies, only about 9% of Australian companies are operating in Asia. Why is this? Given the size of the Australian domestic market compared to the markets in Asia why arecompanies reticent to seek out opportunities there. After all some of these countries are right on our borders. What holds companies back? I believe it is probably a combination of (a) fear, (b) complacency, and (c) failure to recognise the opportunity that these potentially huge markets present. |
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Successful |
Examples of successful ventures in overseas markets include George Clinical and BlueScope Steel. These companies have been successful through a combination of vision, strategy, guts and a bit of luck on the way. |
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Case study |
George Clinical manages global commercial clinical trials in both Australia and India for medical research organisations and pharmaceutical companies from around the world, including the United States and Europe.
‘In addition to the extensive programs the company runs in Australia it now supports clinical trials in India in cardiovascular disease, kidney disease and diabetes,’ says Dr Marisa Petersen, the Executive Director of George Clinical. ‘Work on these diseases matters because they are all major and growing issues for the people of India.’ Dr Petersen sees India as an important clinical trial destination that complements the company’s Australian trial programs. ‘The lower cost of conducting studies in India compared to many other countries is an additional attraction, but must be combined with high quality data to be of value.’ One of the objectives of George Clinical in establishing a presence in India is to cater to the global market while working with Indian pharma companies and conducting clinical trials. In the longer term, the company is also looking at servicing SAARC countries from India. |
| Case study BlueScope Steel and Tata Steel |
With uncertainty over the long-term future of manufacturing, the joint venture between India’s Tata Steel and Australia’s BlueScope Steel is an example of how Australian manufacturers can find new markets and new revenues overseas.
While BlueScope Steel can trace its heritage to the birth of steel making in Australia, the company’s future sees itself in selling Australian innovation, technology and expertise to Asia and beyond. BlueScope’s successful global partnerships allow it to prosper in diverse markets such as North America, Saudi Arabia and India, where the company established a joint venture in 2005 with the Tata conglomerate. The partnership between Tata and BlueScope has outperformed expectations, powered by India’s economic growth. Today, Tata BlueScope Steel has three business divisions in India offering premium brand steel products for building and construction. The company has four state-of-the-art manufacturing plants, supported by a network of sales offices. A board that comprises representatives from both companies governs the Tata BlueScope business. BlueScope, which had limited operating experience in India, opted for a joint venture because of Tata’s local brand recognition and its corporate values. Tata had strong growth ambitions, and a marketing and branding ethos similar to BlueScope. BlueScope had to do the hard slog of building brand value. This is one of the reasons why it is so important to have a strong, well-recognised local partner. |
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An international |
Probably the best opportunities exist for companies with a disruptive or breakthrough product which has a clear advantage over its competition. This can be in technology, biotechnology, health services or green technology – to name a few potential opportunity areas. There are many more.
Even the best products need a strategy to have the best chance of success. Having an international strategy in place gives the company a real set of objectives. An international strategy is like a business plan. I’m not talking about a 199-page document but a concise statement of the overall objectives and an action plan to match. A really important point is to ensure this strategy is not completely set in stone because things will happen to change the way forward. Being prepared to change what doesn’t work or needs a tweak is a necessary part of the strategy. Inevitably unexpected opportunities will arise and difficulties encountered but a degree of resilience is needed to achieve results. |
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What strategy |
A good international strategy should address all the areas within any business strategy, namely:
· Market research · Product offering and unique selling proposition (usp) · Target market · Marketing plan · Pricing · Distribution channels · Resources · Financial plan – including the best case and worst case scenarios |
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The dos and |
There are some important considerations when expanding into any overseas market. These are some of the dos and don’ts.
· Do ensure you have a strategy · Do get expertise to get your strategy formulated · Do ensure you have an experienced person or organisation on the ground in the market you are entering · Make sure you plan the resources and money to make it successful · Focus on one market to start with in order to prove the concept and to make sure you’re not spread too thin · Don’t be impatient – breaking into new markets takes time and effort · Beware of consultants who promise they have networks / contacts – you really need to have someone you can trust on the ground |
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Summary |
If you have a great product or service (particularly a disruptive product) Australia may be too small a market for your company to be truly successful. Get good advice regarding the legal aspects, get expertise in Australia and particularly in the local market.
Having the right business partner for product distribution is always essential and for overseas markets it is critical. Take time to do the due diligence on the partner you choose. Ensure you have the right agreements in place which protects your copyright. Finally get some good advice – seek help from people you know can add value through their networks and expertise. There are great opportunities for Australian companies with the strategy, determination and sheer courage to succeed. |