The attraction of high-growth markets is strong, and companies of all sizes are looking to develop in new regions that are full of potential.
However the rules of the game have changed. There are regulatory, political, infrastructure and cultural considerations.
There are also local players, who can be just as innovative, high-tech, well-branded and service-orientated, and who can also tap the global market for the same talent, capital and technology to win market share.
Whether you have international growth objectives or have off-shored some resources and back-office functions, it has become essential to treat new markets as core markets. Success requires a stronger focus on local capabilities and well-connected partners and an understanding of local culture and ensuring that the incorporation of different cultures becomes a strength of the business, rather than a weakness is a key consideration.
Doing business coherently across boundaries delivers benefits, beyond achieving additional revenue. A project manager can now compile a virtual team that combines the best talents from across the world to work together at the drop of a hat. Employing the best of the available local talent is now possible, and connecting them to the head office with ease is essential. However, the challenge is that collaboration between different cultures is harder to manage, because of deep-rooted social differences that govern how people work together.
Modern collaboration technologies provide the platform for this to happen, and a having the advantage of a multitude of perspectives and viewpoints can spark the dynamism and innovations that every company craves. Using multiple communications channels can help minimize misunderstanding that could occur on a conference call for example. Video can help participants pick up visual clues that can be very important in discussions and IM can clarify certain points where required. Other collaboration tools such as voting functionality can also help people get their voice and opinion heard in large groups.
This view is confirmed by a study conducted at the Indiana University, which found that culturally diverse teams outperform homogenous teams in the long run.
Some cultures are more likely to be animated and express excitement than others. This does not mean that those employees from more reticent cultures are not also excited about a new project or that they will not give their all to achieve the goal, so increased cultural understanding is a key success factor here.
Currently, South African businesses have an advantage over businesses from beyond the continent because they have a better understanding of cultures in neighbouring states. However, because the opportunities in Africa are increasingly hard to ignore, this advantage may soon disappear as more companies educate themselves about local cultures when thinking of expansion.
However far apart your team are, a greater understanding of the dimensions of different cultures can be gained by deploying Unified Communications tools like video conferencing and instant messaging. Digital technology solutions also allows people to e-meet before official meetings, establishing common ground and increased understanding.
Taking this approach is especially important in regions where it is generally accepted that a relationship has to be established before business can be conducted.
Creating cultural synergies enables regional offices to function as satellites of the head office, and also delivers a vehicle for extending a brand where products and offerings need to match those that are available in the country of origin. Establishing multiple value chain functions in emerging markets creates additional revenue streams. The Indiana University Study found that where companies established only one function in emerging markets, the revenues delivered only 10% of global profits. For those companies that established more than five functions in their emerging markets, this figure jumped to 31%.
It is therefore important to approach expansion in new markets in a holistic way; equip and connect new offices with collaborative technology, and empower them to function in the same way as the parent business.
By: Yannick Decaux – Country Manager, South Africa; Sales Director, sub-Saharan Africa, Orange Business Services.