2009-09-30
Swedish companies that establish business on new markets usually choose to start up with a cooperation partner. The reason is that it is often easier, faster and less expensive compared to setting up own subsidiaries.
If you find the right distributor, you will get access to valuable knowledge and the right sales channels on the new market which obviously increases the chances of success.
Unfortunately,
I have seen too many companies disappointed with their cooperation partners. The reasons have been that they were not interested, they had no knowledge, they had the wrong image/contacts on the market, they would rather sell competitors' products/services, they were too small, they were too large, they had the wrong geographical location, etc.
I can say that in nine cases out of ten, they have not given the effort to make a simple selection analysis. Most often, they have been contacted by a distributor or met a nice person at a trade fair and then started the business. Honestly, would you recruit a key-person in this way? Probably not!
I think the selection process is important. You would want something to compare. A few years ago, I was part of setting up the golf resort Bro Hof Slott outside Stockholm.
When the architects came up with suggestions, we did not agree to the first suggestion mentioned just because it was easy, we rather wanted a selection of different solutions.
Sometimes it appeared that the first proposal was the best, but only after having seen other proposals. If a salon in the palace should have red walls, the question became what red color. An easy way for us was to paint a color sample of the expected red color on the wall and to the left a number of lighter versions and to the right a number of darker versions. This gave us a selection and a reference to which red color was the most appropriate.
In the 1990s, I was the CEO of Poolia International and responsible for Poolia establishments in Norway, Denmark, Finland and Germany.
Our strategy was to acquire companies from each market in order to grow fast. Based on a thorough profile of demands, we identified suitable candidates for the acquisition. For each market, we met with at least 7-8 companies and the goal was to have at least 3 companies in the final round. To meet with all these companies gave us a good insight to the staffing industry in each country but, above all, we had a choice which gave us a sense of security in choosing the right companies.
What I want to say is that you should work with a selection of potential partners before making a decision. The easiest approach is to make the partner seeking process a recruitment process. Start by developing a profile of demands such as geographic distribution, range, size, ownership structure, corporate culture, experience, distribution network, etc.
Through trade associations or databases, it is easy to obtain a gross list of distributors in a selected industry. Make your selection by going through websites and limit the gross list to 5-15 companies. These are they companies you will contact and conduct a telephone interview with. Finally, you will hopefully have between 3-5 companies that you will arrange meetings with. Before you leave, make sure to be in contact with the trade association, and a final customer on the new market.
If you do not have the time or the experience of the above approaches, there are companies that can help and it does not necessarily need to be expensive. It should be added that the above process will give you knowledge of the new market in which different individuals talk about the industry and its potential.
A costly experience for many companies is that they believe that once they have found the right cooperation partner the job is done. However, this is actually when the job begins. Set goals, follow up, be present and treat your partners as your employees!
In order to succeed on a new market, you also need luck. Sometimes you may get lucky by making a selection process. Good luck with your new partner.