Ignacio Prieto

If you love your product, stick by it

Friday, April 24th, 2009

Let me ask you a few questions, it won’t take long.

  1. Does your company have a unique product or have developed a know-how or technology that allows you to differentiate from the competition?
  2. Are you market leader in your niche?
  3. Did your sales topped and need to find new ways to grow?
  4. Are you committed to long term relationship with your customers?
  5. Do you make money with your business?
  6. Do you share “The cobbler should stick to his last”.
  7. Do you strive to get your company better every day?

If you answered yes to the above questions, you may have the possibility of expanding your business internationally by a simple procedure to explain and a little more difficult to execute but with great chances to succeed. How to do that?

REPLICATE YOUR BUSINESS ABROAD

When a company has been blessed by the market with demand on its products and good profit allowance, the best thing you can do is to focus even more on it , excel on everything relating to it and defend your market share.

Forget about diversification, don’t get seduce by promising synergies, cross-products development for the same customers, new business initiatives to reduce risk, etc. Be deep, not wide.

Remember the best way to fight the crisis is to be the best in what you do.

But do not forget to keep a close contact with your customers, and with the customers of your customers. You need to know first hand what is going on, where the market goes, what’s new and which issues need to be addressed.

You managed to be very good at what you do. This is a difficult task but it is even more difficult to keep it that way. Your competitors are looking to erode your position, they want your customers.

You may worry that large companies may come up into your market niche with competitive prices. It is challenging to keep prices high if customer don’t appreciate the value associated with it. Even if they do, price is still the sale’s prime determinant factor.

You are an innovator. Keep innovating. Innovation is no longer a sustainable advantage. Continuous innovation is.

Don’t lose much time benchmarking. You may end up imitating instead of innovating.

Work side by side with your customers and have them participate in the design process. Codevelopment is the magic word.

Locate your activity on the supply chain and see who adds value and who takes it.

Vertical integrate down and upstream. If you identify critical processes and have the financial resources, buy them up or developed them yourself.

And finally, search into markets in other countries where, after the required local adaptation, you can replicate your business.

Don’t forget to give a crystal clear explanation of what you want to achieve to your people. Engage them in the plans and have them align with the goals. The most sustainable advantage rest in people and their processes.

Move step by step. One country after the other. Start with an easy one. You cannot afford to fail the first trial.

But it may take sometime. Don’t give up easily. Persist.

You may partner with a local entrepreneur but you have to keep control of the business. It is your company, in another location and different circumstances but your company in the end.

Keep close contact with your customers here as well. And this is something you should do personally, even if you have to walk in together with a interpreter.

Sooner than later, your sales will start picking up. Your P&L will start showing the benefits of the economies of scale and you will be stepping forward on the experience curve.

Your position in the domestic market will become stronger because your gross margin will stand to fight price rivalry and your product would have surpassed competitors’ because of the cross-knowledge you have acquired in other markets.

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