02 Sep Competing Effectively in a Global Environment
Wendy Horn was recently interviewed by Much Shelist, a midsize Chicago law firm that serves as the Illinois member firm in Ally Law, a group of more than 60 independent law firms and more than 2300 professionals that provide comprehensive legal services to major corporations worldwide. Liftoff provides a variety of marketing and management services to Ally. Much Shelist spoke to Wendy about how midsize companies can compete effectively in a global business environment.
Much Shelist: Must all businesses take the global marketplace into consideration, even if they don’t have international operations or customers?
Wendy Horn: Absolutely. As Thomas Friedman noted in The World Is Flat, lowered economic, political and cultural barriers, combined with exponential advances in technology, have shrunk the distance between businesses and their suppliers and customers. Transaction times are also much shorter—virtually instantaneous in many cases. These developments don’t just apply to large companies; desktop freelancers and small startup businesses are now competing against and collaborating with major corporations on nearly equal footing.
Even if you’re certain that yours is not a global business, it’s a fair bet that your competitors disagree and have already taken steps that allow them to function effectively in this new environment. It may be impossible to stay ahead of the pace of change, but you can certainly make every effort to keep up.
MS: What are some of the key challenges and opportunities facing midsize businesses in this global era?
WH: The most important business-positive changes involve the lowered political, economic and social barriers I referred to earlier. For example, countries are finding it quite difficult to regulate the Internet, one of the key drivers of trade today. Virtual 24-hour marketplaces are taking the place of fixed, geography-based markets. Buyers and sellers of materials and services can find each other practically anywhere, anytime. Even law firms are discovering that traditional, jurisdictional lines are beginning to blur, enabling them to provide client support on a much broader scale. All of these changes open up worlds of opportunity for savvy companies.
There is a flip side to this brave new world, of course. As governments find themselves losing control in certain arenas, they tighten restrictions elsewhere. For example, in the United States, the federal government has constricted the free flow of money through the Patriot Act and other legislation. Simple tasks, such as setting up bank accounts to accept international wire transfers, can be incredibly difficult. Likewise, international banking laws have become so complex that they can even affect services provided to your company by the banker down the street.
MS: How can companies address or take advantage of these changes?
WH: First of all, be open-minded. Don’t presume that any new market is closed to you, or that any new way of doing business won’t work for your company. Be willing to explore new opportunities, intelligently. Not all of your initiatives may work out as you hope or expect, but the costs of doing nothing can sometimes be much higher than those associated with the occasional misfire.
Strive to understand the impact of new technology on your company, particularly your sales and marketing functions. Something that seems unrelated to business, such as social networking sites, can offer major benefits at a relatively low cost. For example, there’s been a lot of buzz about Groupon.com. I recently heard an interview on NPR, in which the head of a cupcake company talked about being approached by Groupon to offer a promotion. Initially reluctant, the company decided to take the plunge—and did more than two months’ worth of business in just one week. How you’re reaching new and existing customers is often more important than what you’re selling (and whether or not it’s “new and improved.”)
Identify business advisors (e.g., lawyers, accountants, bankers and other consultants) who also understand these new ways of doing business. Work closely with these professionals and learn from each other. Things change too quickly for any one individual to master them all, so fill your quiver with many different arrows. Good advice is an investment, not an expense.
Recognize that niche businesses are becoming the norm rather than the exception. While there will always be a place for the Walmart’s of the world, a growing number of professionals and entrepreneurs are focusing on very specific markets and services. For example, the Liftoff team draws on the skills of marketing, public relations, web design, technology and communications professionals to provide marketing services to boutique and start-up law firms—a small but important slice of the legal industry. Your company may be able to take advantage of similar niche opportunities.
MS: How can businesses minimize the risks of identifying and contracting with global suppliers they may never meet in person?
WH: To be sure, technology hasn’t done away with the need for due diligence. We used to say that just because something is in print doesn’t mean that it’s necessarily true. The same principle applies to the vast world of the Internet: a professional-looking website doesn’t mean that the company behind it is completely above-board and trustworthy. In fact, modern technology has made it very easy to pull off an incredible variety of scams.
Work with your advisors to investigate potential business partners, suppliers and vendors—even customers if they are particularly large and would account for a significant portion of your revenues. Make sure that you have a culturally knowledgeable partner who can help manage these assessments. Ideally, your advisor would have a presence in the country in question or, at a minimum, a broad understanding of how business is conducted there.
Members of Ally Law are a good illustration of this idea. Before being invited to join the organization, a law firm is reviewed thoroughly by the other members in order to ensure that it can provide the highest-quality legal services possible. Likewise, members regularly act as local vetting agents for clients of other member firms worldwide, providing direct access to counsel and business guidance in the jurisdiction in which they plan to do business.
Finally, work with bankers and other financial advisors to help you understand the potential effects of economic cycles, so you can weather the inevitable ups and downs in local, regional and national markets.
MS: What other resources are available to help businesses compete in the global marketplace?
WH: Don’t underestimate the value of government agencies and programs. The US Small Business Administration, the International Trade Administration of the Department of Commerce and the Overseas Private Investment Corporation are just a few of the agencies dedicated to helping American businesses remain competitive at home and abroad.
Most countries maintain a local branch of their chamber of commerce in major foreign cities, which can act as a steppingstone toward new markets. For example, you may have a key business partner or vendor in Portugal. If the two of you are exploring opportunities in Brazil, your partner may want to contact the Brazilian chamber of commerce in Lisbon on your collective behalf.
Finally, formal and informal groups, including industry associations and professional networks, can provide insights into doing business at the global level. In many cases, they can introduce business leaders to their peers overseas, who can in turn provide introductions to potential partners, clients and customers in their home countries.