AmeriChannels2 Blog

A recent article in The Economist on June 1st 2011 provided some interesting questions about the business of outsourcing in India and other countries. Here is an excerpt from the article.

“Yet there is a slight whiff of a mid-life crisis. So far this year both Infosys and Wipro, two of India’s “big three” IT firms, have given guidance for profits that has disappointed analysts. Both are restructuring their operations and have had turbulence at the top. Infosys muddled the transfer of power among its founders. Wipro, a firm still controlled by its long-time leader, whose villa can be spotted through a forest glade next to its headquarters, lost its joint-chief executives. Only the largest, Mumbai-based TCS, is firing on all cylinders.”

We have had conversations with a number of US companies who are rethinking their outsourcing strategies. With rising labor costs and a desire to support “Made in America” the move is definitely starting. What are your thoughts?

What’s the future of outsourcing in India?  Is there a place for outsourcing abroad give rising costs?  Have countries like India outlived their turn in the cycle and with rising labor costs are they becoming obsolete?

I was reading an article in the Economist “Brazil’s labour laws: Employer beware” which highlighted some of the risks of running a business in Brazil. This experience is not limited to Brazil. Things like this can be found in many countries. What often seems ridiculous is status quo in some countries. In our Top Ten Tips the seventh tip is Don’t Ignore The Political Situation. Part of this is understanding local laws, rules and regulations. This article in the Economist talks about the laws that expose employers in Brazil to unecessary lawsuits and liabilitites. It is a must read for anyone considering international expansion not just to Brazil but anywhere.

What types of bizarre situations have you experienced?

The Economist article can be found here http://www.economist.com/node/18332906?story_id=18332906?fsrc=nlw|mgt|16-03-2011|management_thinking

Almost all “tips” lists for international business include a recommendation to find a good partner – ours included. But what if you want more information before you jump in? Most states have either, or both, a U.S. Commercial Office and State Trade Office which offer workshops, and informational sessions on a regular basis.

As an example, this weekend I had a chance to catch up on various newsletters and thought the upcoming workshop in Minnesota “FINDING and MOTIVATING the RIGHT Foreign Business Partner” looks like it will offer some great information, and a chance to meet and exchange ideas with other business people.

http://www.positivelyminnesota.com/Business/Exporting_Trade/Calendar_of_Trade_Events/Seminars,_Conferences_Roundtables.aspx

 As Dave Forest points out in the article referenced below, the United States exports relatively few consumer products, like t-shirts and CD cases. What may not be well-known is that the U.S. continues to enjoy relatively strong levels of capital goods exports.  In fact, Forest points out that capital goods exports levels earlier this year were at 2006 levels, still 35% higher than 2003.

 Opportunities to expand and increase revenue exist.  Take advantage, even in a down economy.

 http://oilprice.com/Geo-Politics/North-America/America-Export-Nation.html

Dan Brutto, President of UPS’s international division, shares international business best practices with small businesses looking to export. Why? This year’s UPS Business Monitor United States, an annual survey of U.S. small and midsize business exporters with fewer than 500 employees, found that one-third of respondents cited cultural or language barriers as the reason why they didn’t follow up on an international sales lead.

As Brutto notes, 96% of the worlds’ consumers are outside the U.S. Figuring out your international strategy now so you don’t have to play catch up later is good advice. Learning from others so you don’t have to make the same mistakes is also good advice. Check out Bruttos article here: http://www.businessweek.com/managing/content/aug2010/ca20100823_647891.htm. And then check out our Top Ten Tips link. International business strategy is not a ‘one-size-fits-all’, and you will need to do your homework. But taking advantage of good advice? Priceless.

“Russian automaker Sollers, known earlier as Severstal Auto, plans to launch assembly of foreign-branded vehicles in the Russian far eastern city of Vladivostok” reported by JustAuto.com in July 2009. Why should I care about a news headline from a year ago you ask? If you are in the auto parts industry, you might be looking for revenue opportunities just now. Hadn’t thought of far-eastern Russia as a viable market? Check out this headline from last week from The Street:
“Despite today’s woeful economic climate, one of the most dynamic global markets is emerging in a most unlikely place: the Russian Far East. A key player in that region, Marcon International Trading, Inc., is actively and successfully engaged in the export of automobile parts, lubricants, diagnostic equipment and tires.
Of course, this move didn’t happen over night. Marcon (Seattle) has long been developing its presence in the Russian Far East markets, and is now in a position to create a joint-venture partnership in the region to take advantage of the growing demand for automobiles, and – not coincidently – tapping into a hungry industry of auto suppliers in the U.S.

Of course, even companies hungry for new revenues need to do their homework to make sure new partnerships are appropriate for their business. The point is, a global approach to finding lucrative markets can – and does – work.

http://www.thestreet.com/storycomments/10837197/1/marcon-international-trading-inc–pioneers-in-the-automotive-industry.html

http://www.just-auto.com/news/sollers-looks-east-for-foreign-brand-assembly_id100247.aspx

www.MarconMarket.com.

Compari – maker of Absolut vodka and other brands of liquor – reported revenue increases of 11% for Europe (not including Italy which grew at only 2.9%).  Global sales were up 8.7%, with favorable reports that Eastern European markets are returning as well. In fact, the company is optimistic about various markets around the world (http://www.businessweek.com/news/2010-08-06/campari-wins-share-in-europe-as-rivals-look-elsewhere.html). 

 So why do I bring this up?   Sometimes it’s easy to blame the economy for lack growth; in fact, Campari has had mixed results in markets around the globe. But it also shows that a focused strategy, with an eye to market share, can win even when times are tough.

 It would seem that Campari has done their homework:  each market is researched and analyzed for the most relevant information that can make – or break – a growth strategy. That way, Campari can prioritize markets for short-term gains, while focusing overall strategy on the longer-term win.

For or against, either decision can have a significant impact on your decision to enter – or expand – into the Turkish market. Considered a “2cd world country” in the 1970s when I lived there, Turkey has continued to grow and advance its economy. Today the Turkish market has attracted many companies from around the world to invest. One example: Midwest retailer Best Buy entered the market a few years ago, and continues to support investment in the country.

Why Turkey? Is it a European play, to gain a foothold before they join the EU? Is it a Middle Eastern, or even southwest Asia play, to gain market share with an eye to expansion from a friendly base? Turkey has historically been the “crossroads” between Europe and Asia, and shouldn’t be overlooked in any international business strategy.

BusinessWeek article from 27 July caught my attention (http://www.businessweek.com/magazine/content/10_32/b4190014477970.htm) as the European debate continues around the Turkish bid to become an EU member. In the meantime, take a look at this important market from the perspective of your company’s needs for future growth.

BusinessWeek certainly caught our attention with this headline recently. Yum! brands, like Pizza Hut, KFC, and Taco Bell, are finding the U.S. market challenging as consumers focus on saving money and getting in shape. However, Yum! has taken the long view with regard to their international markets, and continue to enjoy success even as they shore up global market gains against competitors like McDonalds. 

Yum! Vision & Strategy

“Yum! Brands is committed to continuing the success realized during our first ten years. Our success has only just begun as we look forward to the future, one which promises a long runway for growth, especially on an international level. We maintain a consistent commitment to deliver at least 10% EPS growth annually. With more than 37,000 restaurants in over 110 countries and territories, Yum! Brands international growth sees no signs of stopping as we continue to enter international markets, introducing people around the world to our winning brands.” (Yum! website www.yum.com)

“Yum!’s is an amazing story about how they conquered China so much earlier than their main rivals,” says RJ Hottovy, an analyst at Morningstar. “Part of the reason is that they built up their supply chain and their distribution system quickly, and that is giving them a real competitive advantage. When you are setting up restaurants in new territories it is often difficult to procure packaging and to develop good relationships with suppliers, but Yum! now has a nice little edge.”

The Yum! story doesn’t stand out because they are a large, multinational company.  It stands out because Yum! has a defined international strategy and focus: they localize as needed, but more importantly they paid attention to supply chain and distribution – key, relevant factors in their industry  that would support sustainable growth and profitability in the long-run. It’s hard to argue with 10% EPS growth annually.

http://www.businessweek.com/globalbiz/content/jul2010/gb20100714_088544.htm

Does LinkedIn mean as much to someone outside the US as it does to someone in the US? I think it does.

At first, I thought many of my international friends and colleagues were just being kind when they accepted my LinkedIn request. They had a few connections but usually not too many.

That was a couple of years ago. Now it is almost a requirement for someone who is international that wants to do business in the US to be a part of LinkedIn. It’s that networking connection and not just the latest trend. I hope my friends and colleagues are becoming more active on LinkedIn because it makes good business sense.