Meet the Expert
Director/Partner, CLIA Consulting
- Current research focuses on two main areas – cross-cultural competence and business internationalization, particularly medium-sized companies. Recent focus emerging from these two fields is new forms of open, collaborative, user-led innovation and their impact on business growth and social networks.
- Fluent in French and German and knows the institutional infrastructure supporting business entry in Europe's largest markets.
- Work exploits the links between foreign language competence, intercultural competence and international management processes.
- Led projects funded by UK government, the European Commission and the OECD, mainly researching small and medium-sized enterprises (SMEs). Currently involved in a European project looking at obstacles to SME penetration of the assistive technologies market.
- Consulted on exporting, business growth strategy, international HR strategy and innovation.
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International Expansion and Development into Europe
Director/Partner, CLIA Consulting
- Companies don't understand the difference between national and regional identities in the areas they're trying to do business.
- When you're looking to do business in a new country, understanding that country's culture is obviously key to success. However, too often companies go to a new country having a fairly good understanding of the country overall, but they fail to take into account regional variations within that country.
Take Germany as an example. Germany has a reputation for being very structured and unified and easy to understand from the outside. But once you start actually doing business there, you realize that it's actually very federal, meaning that while there is strong central leadership, the state system is deeply embedded historically.
Regional identities are probably more important than the national identity when it comes to doing business there. This is partly because small and medium-sized companies, which are really the backbone of the national economy, rely as much on regional banks as they do on national ones. Businesses are first and foremost part of their regional communities, and just because you've penetrated and understand one regional community in a given country, it doesn't mean you've "mastered" the others.
- Companies make the assumption that English is the lingua franca.
- English is the lingua franca for many European companies, and more and more companies are adopting English-as-the-lingua-franca policies. But it's not the case across the board. Moreover, often it looks like a company operates primarily in English, but it really does not.
For example, a company might represent itself in English on its web site and in its key strategic statements and documents. But beneath the surface, most of the business is still conducted in the native language, or even in different languages if the company is multi-national. Even if there is a lingua franca, you can't always assume that you can approach anyone in the company in that lingua franca and have the relationship with them that you want to have.
The relationship that you want to have will have to come through the native language of the person you're talking to if that person is a key influencer in that organization. Scandinavian countries may in cases be an exception to this rule, but even there, you will need to talk to consumers in the local language.
- Individuals assume that just because they can understand the language of the country that they're doing business in, they're prepared to actually do business in that language.
- There's a big difference between proficiency operating in a social situation in a second language and proficiency doing business in it. This is often because in business, there is typically a large sectoral vocabulary, and documents in particular are going to be thick with vocabulary specific to a business sector, including strategy and performance terms.
The number of people who have proficiency in a foreign language in social situations is quite large, but the number of people who can work in a foreign language at a high level of fluency in speaking, listening, reading and writing is really quite small. This is why it's so crucial to find top-notch translators and interpreters who have knowledge of the sector in which you're working, manage them well and pay them accordingly.
- The difference in terms of "selling culture" is underestimated.
- In Europe, many companies and cultures don't respond well to American-style "hard selling."
In Germany, for example, using "everyone else has it" or the number of units you've sold doesn't work. German expectations and consumer attitudes are based on quality and excellence in engineering, and that's what buyers want to hear about. They know they have higher expectations than other providers and consumers in the economy.
The French and the Italians see the buying process as the start of a relationship. They're not interested in making a one-off purchase; they're interested in that first purchase as a means of developing a longer term understanding of a particular market, supplier or process.
It's important to tailor product marketing to very different market expectations. Even if your European counterparts speak English, that doesn't mean they'll respond to cost-based or volume-based selling.You need a marketing strategy that speaks to them culturally.
- Regulations relating to business activity vary from country to country.
- There are many different levels and spheres of regulation in Europe – standards and norms that apply across all of Europe, national ones, and regional ones.
For example, employment legislation varies tremendously from country to country, a key thing to consider if you're opening offices in different countries. In France, employees work 35 hour weeks, but in Britain, there's no limit to the number of hours employees can be expected to work. Another example of variations in business practices that can really affect your enterprise are credit frameworks. Payment periods vary across countries and sectors so managing cash flows can be problematic.
Learning to manage time and relationships is a critical challenge in Europe.
- Companies don't do enough research on the market differences between countries and even regions.
- How you sell your product, and what you need to do in order to sell your product, will vary tremendously from place to place.
The best strategy for selling your product in France will not apply in Finland, Sweden or Italy. It's crucial to do market research in each country and/or region, including getting very close to your consumers to truly understand their preferences. Food markets, for example, can vary tremendously from place to place -- how they're laid out, what sales techniques are used, and how the products are merchandised. You have to see how your product fits in with what else is there, and localize accordingly.
Some of the local ways of doing things rest not so much in identity as a nation-state, but go back to how provinces and minor states operated in the 19th century and before. For instance, if you have a product with a regal name that includes "prince," "princess," or "duchess" – anything that implies nobility or aristocracy, along with visual images that you use with it – you could have a product that is either very attractive to consumers or very unattractive to consumers depending on regional history. Northern Italy has a very strong right-wing royalist history, and people there are less attached to the secular Italian state than they are in central Italy, and people in areas that are 50 or 100 miles away from each other will respond very differently to how you present your product.
- Companies rely too much on their in-country agents or representatives and don't do their homework on them.
- You have to be very careful about who represents your company and make sure you do the research to find someone who has terrific knowledge of the market, but also is very motivated to do what you need them to do. Your deal with them needs to be very carefully crafted.
Too often companies invest a tremendous amount in a representative or distributor but don't manage them closely enough. They assume that their representatives will help them to reach their targets, but sometimes they might have ulterior motives for not wanting you to reach your targets because your company threatens some other stream of business they have. Or, they genuinely want to help you succeed, but they need support from you in order to do it and they're not inclined to overtly ask for it.
Agents and representatives need to be proactively supported and monitored in the early stages, and you won't know for a year or two if they're really doing their job. It's important to develop a strategy for building a network around your agents so you can triangulate what they're up to and if you've really got the right deal.
- It's difficult to get the right people in a room, and to do so you have to be familiar with who the right people are.
- This is less of a problem in northern European countries, including Germany, the UK, and those in Scandinavia. But identifying the right person to do business with in Latin cultures can be very difficult.
Companies in Latin cultures in Europe almost deify their chief executives, and they protect those people. Those top-level people make all the decisions, and the people they put in a room with you are just conduits. Therefore, you need to know about the range of authority of the people that you're talking to, and you need to persuade them that you need to sit down with the top person, or the person that he or she reports to, without undermining them. It's important to be attentive to their needs and not be too rigid with your own steps in the sales process because those steps will vary massively across Europe.
International Expansion and Development into Europe: Common Problems