Adapt to Change

 How flexible is your company when it comes to adapting its product or service to global markets?


If you have been doing business in your home country in the same way for twenty or more years, you will need a different mental attitude before taking your business on its foreign adventure. Inflexibility will be your enemy. In order to conduct business abroad, especially in emerging markets, you and your organization will have to be flexible so that you can evolve with the market and respond to competitive and regulatory threats that may come along. Yes, flexibility is also a very important asset in the domestic business arena, but it is that much more important when you are entering foreign markets and planning to grow your business there.

As global markets for medical equipment and services blossom, U.S. manufacturers stand cement their position as credible players and compete for their rightful market share in many countries. One segment of this market where U.S. companies will likely not be able to compete successfully abroad is emergency medical vehicles (ambulances). The key reason is inflexibility.  Over the last couple of years, we had to pass up several mandates for financing U.S.-made ambulances and clinics. There was a 1,500-unit order for Ukraine and a 500-unit order for Kazakhstan and just to name a few. The reason is very simple. All U.S. ambulance models, except for one (which is based on a European design and cannot be exported) are fabricated on top of large U.S. made chassis with massive 6.0 and 6.7 liter engines. These are great in the U.S. where the roads are wide and gas, at least until recently, cheap, yet completely unacceptable in Eastern Europe or Africa where gas is extremely expensive, streets are often narrow and roads to reach patients are poor or nonexistent. Of all equipment segments to be adapted to foreign use, the fabrication of ambulances lends itself perfectly to implementation of smaller engines, all-terrain chassis, and other attributes that make the products more competitive outside of the U.S. Some fabricators do make  halfhearted attempts to adopt their products to the target markets, yet even they simply wish to sell their equipment in the U.S. without providing in-country service or support.

In one case, a mandate to supply mobile clinics to Kazakhstan called for serious all-terrain capability. In that instance Russian made mobile clinics, albeit inferior on the equipment side, but built on top of military truck platforms, decimated the U.S. competitor who offered a stock U.S. product made for light off-roading. There was absolutely no reason for it, just inflexibility on the part of the U.S. supplier.

In some ways, flexibility is a result of commitment. Once you truly commit to the market, you will be much more apt to bend and shape your business in response to the demands of the market and to address competitive challenges. It goes without saying that the basics such as marketing materials, a product’s voltage, product instructions, specifications and training aids must be adapted to the local language and customs. But you should be prepared to license your intellectual property, alter your business model, product packaging, local compensation plans and product positioning as warranted. Diet Coke in the U.S. becoming Coke Light in many other countries is a great example of flexibility, as Coke adapts both the brand and the product to suit the local tastes.

You should absolutely avoid the “not invented here” syndrome. Often, when you venture abroad, you will find innovative approaches or your local personnel may improve on your product or service. Embrace it, adapt it and encourage it further. Earlier in the book I talked about many of our U.S. business people bringing their air of superiority to emerging markets. Such a disposition often precludes one from seeing innovation and impedes flexibility and adaptation. Do not make this mistake.

Yet, as with everything else, there is a fine line when it comes to flexibility. If you are adapting your product or service to local conditions, make sure the investment of time and money is financially viable. Make sure you retain the intellectual rights for any adaptation. As for your brand and your marketing message, your challenge will be to adapt to the local market conditions, but retain that “American” quality of the product that would differentiate it from the competition.

Flexibility in doing business abroad is key, but don’t over do it, as you risk the loss of your product identity, or erosion of the economic premium, which is essential in foreign market transactions.

This post is reprinted from the book Fluent In Foreign Business http://www.pricetoncouncil.org

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About Alexander Gordin
An international merchant banking professional with over twenty years of business operating and advisory experience in the areas of export finance, international project finance, risk mitigation and cross-border business development. Clients include foreign governments, municipalities and state enterprises as well as Fortune 500 and small/medium enterprises. Strong entrepreneurial instincts, combined with leadership and strategic skills. Transactional and negotiations experience in over thirty five countries. Author of the highly acclaimed "Fluent in Foreign Business" book and creator of the "Fluent in OPIC", "Fluent in EXIM","Fluent In Foreign Franchising", "Fluent in FCPA",and "Fluent in USTDA" seminar/webinar series. Currently developing "Fluent In ......" seminars and publications. Co-author of the Fi3 Country Business Appeal Indices. Extensive international business development and project finance transaction experience in healthcare, aerospace, ICT, conventional and alternative energy infrastructure, distribution and hospitality industries. Experience managing international public and private corporations. Co-Founded three companies abroad. Strong Emerging and Frontier Market expertise. Published and featured in numerous publications including: The Wall Street Journal, Knowledge@Wharton, NBC.com, The Chicago Tribune, Industry Week, Industry Today, Business Finance, Wharton Magazine Blog, NY Enterprise Report, Success magazine, Kyiv Post and on a number of radio and television programs including: Voice of America, CNBC, CNNfn, and Bloomberg. Frequent speaker on strategy, cross-border finance and international business development. Executive MBA from the Wharton School at the University of Pennsylvania. B.S. in Management of Information Systems from the Polytechnic Institute of NYU. Specialties Strategic Management Advisory, Export Finance, International Project Finance & Risk Management, Cross-border Negotiations, Structured Finance transactions, Senior Government and Corporate officials liason

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