Your Partner in the International Business Jungle
Your Partner in the International Business Jungle

Business Models

Market Entry Strategies

 

By examining the way a large selection of UK-, EU-, US- and ANZ-based enterprises have gone about entering the Southeast Asia market for the first time, we can see that the most common approaches combine one or more of the following strategy choices:

  • Cautious: This is viewed as the safest option, with low barriers to entry, and low barriers to exit.  It features:
    • a representative office, service office, or even home (telecommuting) office setup
    • only the most basic local legal entity registration
    • skeleton sales staff or marketing staff only
    • contract workers only

This approach is used to minimise setup costs and to avoid the complexities of local business registration and other paperwork.  The new business venture might be intended as a pilot project, or might be launched in response to demands from a single, key customer account in the target country, or perhaps in response to a fixed-term contractual engagement where renewal is optional, not guaranteed.

Although the operation may also rely on some form of local partnership with a major player, the assumption is that the venture can easily be wound up if necessary.

  • Remote Control: This is viewed as providing tight control for a modest investment.  It features:
    • a small representative or subsidiary branch office
    • a mid-level team leader running the operation, sometimes styled as the 'Country Manager'

Actual business management is conducted by a UK office using electronic media and occasional, if at all, in-country visits.  The in-country office is basically a business unit of the parent company, in all but name.

  • ‘Parachute’ Management: This is viewed as a way of granting autonomy to the local office, whilst maintaining a strong level of 'corporate standardization', at a reasonable cost. It features:
    • a small-to-medium size office with local mid-level management
    • senior management is conducted on drop-in/fly-out monthly or quarterly visits

This approach is seen as a way of containing staffing and management overhead costs, and of reducing culture shock or other integration issues. Organisations can actually grow very large under this style of management.

  • Local Partnership: Recruit a senior manager from the local talent pool, often with a shareholder agreement, and trust that they will grow (and grow with) the business.
  • Divide and Grow: Set up a branch office under the umbrella of a pre-existing regional office (usually in Singapore or Hong Kong).
  • Joint Venture: Find a major local player to co-market your goods and services using their local network and business clout.
  • Expat Management: Relocate key staff into the region on fixed-term assignments while they set up the enterprise according to UK office standards, recruit staff, and effect knowledge transfer to a localized team.

Each of these approaches has its own distinct advantages, but each also has its own often unexpected challenges.  And of course, whatever approach you take, what you really want to do is maximise opportunities and minimise risks.

Challenges

 

The cautious ‘wait-and-see’ approaches send messages into the local market that you are not truly committed to the host country, making it difficult to attract customers, business partners, and staff.  Moreover, the chances are that you will never be on site when a problem arises in the business.

 

The mid-range investment strategies are highly reliant on second party organizations or individuals, either in-country or in-region.  It is natural to expect that these parties will pay greater attention to their own interests than to yours, yet you will be reliant on them for accurate information, analysis, forecasting, and reporting.  Seconding an expatriate manager or management team into the host country might seem an ideal solution:

  • corporate headquarters has a direct link to the new office, and has eyes and ears on the ground.
  • knowledge transfer should be assured.
  • the management of the new venture will be localized when the time is right.
  • expatriate managers will gain valuable international experience that will look good on their CVs, and might be of longer term benefit to the company.

What could possibly go wrong?  Well, first of all you might not have the people available with the right level of business experience and personal characteristics necessary to have a chance of success, and who are willing to travel half way around the world, perhaps with families, to take on such a challenging assignment. And if you do, it is an expensive option fraught with personal, family, and professional risks, which can all undermine the strategy.

 

Naturally you will want to minimise costs and give encouragement to local staff and partners.  But you also have a fiduciary duty to protect your shareholders' interests.  So:

  • Whom will you trust to ensure best practice, professional standards, quality standards, and corporate policies and procedures, are all understood and followed consistently?
  • Whom will you trust to manage your daily reputational risk and ensure excellent corporate governance?
  • Who is going to ensure the integrity of your intellectual property is respected and protected, and that your operations comply with local and international legal requirements?

Maximising Opportunity and Mitigating Risk

 

The ideal scenario would be one where a new enterprise could:

  • exploit local knowledge applied to its specific business goals.
  • gain access to the best local partners and staff in a controlled and measured way.
  • optimize the costs of in-country support.
  • produce a clear, committed roadmap for the engagement and disengagement of interim expat management.
  • enjoy clear, unbiased reporting on the current and forecast state of its projects and business.

 

These are exactly the benefits that Lions & Tigers delivers.  We provide a highly tailored service to a select number of UK and Southeast Asian businesses.  We approach each engagement on an individual basis, with our clients' interests at the heart of everything we do, while working under strict confidentiality and non-disclosure agreements.

Office Address

Lions & Tigers Limited Victoria House

26 Queen Victoria St.

Reading RG1 1TG

Berkshire

United Kingdom

Let us help you plan for success.

Whatever your current level of engagement in Southeast Asia, contact us today to put our team to work for you.

 

+44 (79) 2517 6329

cs@lionsandtigers.co.uk

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Registered in England and Wales. Registered number 8198082. Registered address at Victoria House, 26 Queen Victoria Street, Reading RG1 1TG, Berkshire, United Kingdom. Phone: +44 (79) 2517 6329 E-mail: cs@lionsandtigers.co.uk