International markets: where’s the business for UK manufacturing and engineering firms? How do you take advantage of it? 2 very good questions which I address in this blog as the process of investigating, identifying and taking advantage of, the many market opportunities that lie outside of the UK. (Manufacturing opportunities in the UK will be the subject of the next blog.)
This is the second in our series of blogs surrounding the very positive growth signalled by UK manufacturing and engineering firms. Positive signals are all very well but how do companies keep this momentum going and take advantage of the opportunities that lie outside the UK?
For sure it’s a task both critical and stressful. Critical because you need to constantly monitor the situation and be in a position to change direction when the market indicates the need to do so. Stressful, because it takes nerve and well developed gut-feeling to tackle what, for many, is unchartered water.
1. The process of opening up international market opportunities
The process of opening up international market opportunities for your business is reliant upon you doing a number of things on a regular basis. In other words, don’t wait until you lose a client, or that threat to an income stream becomes a reality. The entrepreneur in you should be scouting about now, seeing the positives in the currency fluctuations we’re experiencing at the moment.
2. Identify external market drivers
Very recently, I helped a client through the process of opening up new international business opportunities for their business, starting with the need to identify external market drivers. Working in the infrastructure construction sector, they needed to improve the level of growth expected by their shareholders.
The next step was to create a detailed market expansion strategy and a plan to ensure all elements of the business were co-ordinated and working towards the same goals. In effect, we aimed to answer the ‘what, where and how’, thereby creating an alignment within the company from all the key functional areas (sales/marketing, operation, purchasing etc). This enabled us to identify gradually which of the 225 countries in the world offered my client the right opportunities.
The external market drivers for my client’s core products were places where a lot of construction (eg damns, bridges, transport networks) was likely to be taking place. Typically these are less mature, developing economies, on the crest of a growth cycle where urbanisation is taking place and a high level of infrastructure needed. The critical data we need was: GDP growth rate, urbanisation figures, anticipated infrastructure and education spend, political stability score.
Once we’d crunched the numbers, we were able to refine our plan and whittle the number of target countries down to a potential (and more manageable) 50.
3. Shortlist the market opportunities
Next came shortlisting the market opportunities presented by these 50 countries. We focused on the chances of winning any business: is a local contractor involved or has the contract been awarded to a multinational with an international manufacturer and supplier already on on board? We spent some time investigating competitors – their size and history. (Their mere presence can be a good indication of the value of the work.)
Where there’s a high level of small-medium sized contractors involved, but low level of local manufacturers, there’s a better chance of winning business in that country. The approach with multinationals, however, is to become an approved supplier so you tender for business much earlier on in the process.
At the end of this stage, you should have a shortlist of 20-30 countries where market growth is high, competition low with no single dominant player.
4. Which products should you be offering?
Which products should you be offering? Do you even have the right ones and do they meet likely needs? And beyond your actual, physical products, what’s your service like? After care and local support matter massively. Then there’s production and storage. As you can see, this is a big topic, and one I’ll be covering in my 3rd blog about product development.
Establishing a good product fit will help you refine your country segment down even further to your top 10.
5. Find a local distributor
Now, the work really begins to find a local distributor – someone to be your eyes and ears on the ground and represent your interests. They must have extensive local experience, expertise in the sector and trading agreement knowledge (eg local taxation). It takes a bit of leg work together with some robust questioning to find the right candidate. I use a tried and tested set of criteria which enables me to understand whether and how a mutually benefitial relationship could be forged.
What’s involved in building a good relationship with your distributor? Mostly, it’s being willing to invest time and effort in making sure they fully ‘get’ your business and the products they are selling on your behalf. Making it financially viable for your distributor to win business is also vital, and something I frequently have to spend a lot of time persuading clients to take on board.
Once you’ve found your distibutor, create a simple process to review and ensure both of you are accountable and benefitting from the relationship – and, of course, put a legally binding (but not restrictive) contract in place.
6. Monitor your progress in new international markets
Once you’ve started trading in your chosen countries, you clearly have to monitor progress. If the data indicates you should change direction, be prepared to do so – the entrepreneur in you should be constantly looking for opportunities to improve your position.
Keep assessing and reviewing performance. What’s working well/badly – is implementation efficient? How’s the distributor relationship working? Competition too stiff? How are your products shaping up?
Put the data in place that tells you what you need to achieve: x number of demos, xx customer visits, xxx samples, x seminars, etc. Ultimately, of course it’s down to the sales revenue you need in order to make the exercise worthwhile.
And if you’re not winning it – you need to be strategic and maybe reassess your focus. Just be sure to have the processes in place to help you make the right decision. And remember, don’t do this on your own – get help from a business adviser – or hire an interim manager. I hope these blogs help you. In my next one, I look at how you can find opportunities in the home market, then how to make sure you are offering the right products.