Whether they work for large or small companies, all international managers face some common challenges: intense competition, rapid change, cultural diversity. The size and resources available to them will determine how they respond to those challenges.
For managers in smaller companies, some of these challenges can be resolved by imitating (in a scaled-down form) the practices of larger companies. Certainly managers in small firms can learn a great deal from the global management experiences of larger firms.
In other cases, challenges must be addressed by entering into and managing partnerships, either with larger organizations or with a network of suppliers. Here are 6 strategies SMEs can consider if they want to overcome these challenges and enjoy success in international markets.
1. Niche marketing
By virtue of their size, small companies do best when they specialize. Either they can occupy a unique niche that has not been noticed or addressed by other firms, or they can distinguish and differentiate their product from anyone else’s.
For example, Artailer is an online gallery and retailer of original art. It deals in several kinds of paintings, photography, printmaking and other new media. It also offers customers the option to commission a custom work and hire an artist to complete their dream project directly through their website.
The website also gives people the chance to create custom boards of their favourite works, view the favourites of others, view recommended ideas to gift to others or use as décor, and has its own blog and magazine.
2. Using technology to level the playing field
Much of the technology available to large companies for communicating with customers and managing logistics can also be put to use by small companies. Small companies can use advanced design, manufacturing and information technologies to enjoy economies of scope. Base products can be readily customized to suit the particular tastes, conditions and applications of each market.
This is the idea underlying the business of WSI, which uses digital marketing techniques to help small and medium sized businesses establish their presence online. In this case, advanced digital technology is both the channel through which the company operates and the product that it offers its clients, helping them adapt the Internet to their own business objectives.
3. Adapting organizational models
Managers in small companies can also adopt some of the organizational structures of larger firms. For example, Jamesway Incubator Company has built a solid reputation based on the design, marketing and sales of world class chicken incubators.
Since the majority of its sales are now made outside of Canada, the firm is organized on a global basis, according to regional world markets. They operate a network of agents and representatives covering all of the world’s continents.
Their website offers a clickable world map where users can locate the nearest sales office by region and by country. For example, clicking on Africa and then on Egypt yields the contact information of the Jamesway representative in that country. Using this flexible structure allows the company to offer global coverage without incurring unnecessary overhead.
4. Becoming an insider
Small companies can become “insiders” just as many large international firms have done.
One way to do this is to make the company reflect the markets that it wishes to target: it can hire people with roots in the target market or hands-on experience working there. If it already has operations in the target market, it should find local managers with appropriate skills and experience. In both cases, the company can benefit from their knowledge and intuition to improve the way in which the firm deals with that market. In some cases, a firm may even wish to consider appointing nationals of key strategic markets as corporate directors.
If the right people are chosen and drawn in, this approach can add credibility to the firm in the target markets, provide it with a useful sounding board when determining its direction and strategies, and generate contacts in the respective government, supplier and customer circles.
5. Alliances between small companies and larger corporations
Both large and small companies can derive significant benefits from an alliance. Larger firms spend millions of dollars establishing worldwide distribution and marketing infrastructures, which are dependent on new and innovative products. Many small firms characterized by entrepreneurial spirit are leading technology developers but lack capital and market reach.
These different perspectives can constitute a fertile ground for alliances that can take advantage of complementary capabilities.
Some companies actively search out partners. For example, Dell manages a program to identify partners able to provide a wide range of services upon which the company depends. Its websites set out the specific qualities that it is looking for and encourages smaller firms to apply.
6. Developing supplier networks
When positioning themselves in global niche markets, smaller companies must use the most efficient and productive means possible. One way of achieving this is to develop their own network of dependable, cost-effective suppliers who themselves use advanced technologies. Among the key strategic services that managers can outsource in the interests of efficiency are design, engineering, production, marketing, servicing, transportation, and telecommunications.
By specializing, a manager can focus the organization on what it does best.
In addition, outsourcing from specialists instead of carrying out all the work in-house allows the manager to get better quality services at lower cost, while retaining multi-skilled workforces able to respond to new opportunities. Effective outsourcing, however, also requires effort and time on the part of the manager who must keep communication flowing, maintain good working relationships and coordinate an expanded supplier network.