Internationalization of small and medium-sized ICT companies
T-109.5410
Technology Management in the telecommunications industry Otaniemi 14.11.2006
Jyrki Härkki
Stages in the internationalization process
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Stages in the internationalization process
Internal
development
Market
development
Market sc reening cr
iteria
Segmentat ion
Screening o f market
options
Selection of m arket(s)
or m arket se
gments
Value Chain Analysis
Business m
odel
Preparin
g partner the proposal
Partner se
lection criteria
Screening partner candidates
Market en try an
d
product launch Selecting the partner
Selecting partner ca ndidates,
Preparin
g for the negotia tio
ns
Meetin g s w
ith
selected partner ca
ndidates
Partner search Partner
search
Market entry Market
entry Partner
search Partner
search
Market entry Market
entry Main processes
Focusing the business
Focusing the business
Preparing the partner
model Preparing the partner
model
Partner search Partner
search
Market entry Market
entry
Strategic Business Areas
Which markets we are on?
Segmentation
Customers A
Customers A Customers B Customers B Customers C Customers C
Need 1 Need 1
Solution X Solution X
Need 2 Need 2
Solution Y Solution Y
Need 3 Need 3
Solution Z Solution Z
Need 4 Need 4
Solution V Solution V
Customers C Customers C
Business A Business B Business C Business D
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Definition of strategic business area (SBA)
• Characteristics of a separate SBA
• own separate markets, customers
• own customer needs
• own solution that fulfill the customer needs
• own sales argumentation
• own channels
• own promotion and marketing methods and material
• own goals
• own competitors
• own mode of operations, success factors
• could operate as a separate enterprise
Strategic Business Areas
• Different SBA = different customer needs = different solutions= different decision makers = different
argumentation= different (channel) partner
• SBA1 – sales man
- mobility, development manager, sales company
• SBA2 - logistics
- M2M, data administration manager, system integrator
• SBA3 - operator
- value added service, product manager, directly by oneself
• To be profitable, the Company cannot manage too many different businesses
• To be able to focus in one or a few SBAs, the SBAs need to identified and described first
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Attractiveness of the SBAs
• Maturity of the industry
• Competitive environment
• Market potential
• Earning model
• ”Main reason to buy”
• Competence needs
• Needed sales effort
• Partners
• Dynamics
• Own competitiveness
Example of analysis of various SBAs
Market
attractiveness
Relative company competitiveness ANNUAL MARKET SIZE
> 20 MEUR/a
10-20 MEUR/a
1-10 MEUR/a
SBA 1
SBA 2
SBA 3
Market selection
Which market(s) to select?
Which markets we should enter?
Example: ICT use in SMEs in Europe
% of SMEs A
T
DK E
S
FI G
R
SE U
K
D E
L U
NL IT NO
Using ICT 92 95 91 98 84 96 92 96 90 87 86 93
Having web access 83 86 66 91 54 90 62 82 54 62 71 73
Having a presence on web via own web site
53 62 6 58 28 67 49 65 39 31 9 47
Having a presence on web via third party web site
26 N/
A
28 N/
A
8 N/
A
11 21 13 N/
A
26 N/
A
Making e-commerce purchases
14 36 9 34 5 31 32 35 18 23 10 43
Making e-commerce sales
11 27 6 13 6 11 16 29 9 22 3 10
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Strategic conclusions
High
Small
Strong Weak
Put effort in the growth or managing the markets
Avoid / abandon
Cut down or focus to profitable business, country
or segment Market criteria
• size
• growth potential
• intensity of the competition
• uniformity of customer needs
• local preferences / tastes
• cultural / language barriers
• local content requirements
Technology criteria
• development stage
• speed of change
• local standards
Technology criteria
• technology competence
• product performance
• ability to innovate
• R&D capabilities
• quality / reliability
Company competitiveness Market criteria
• market knowledge
• market share
• company image
• sales power
• references
• ability to support
• product line
• product features
• delivery capabilities
• price
Market attractiveness
Market selection / Product X
Market potential
Competitiveness High
Low
High Low
France
Sweden Holland
Estonia Poland
Czech
Australia
Switzerland
Greece Argentina
Mexico Japan
Turkey
Romania
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Screening the market opportunity
Value Chains and Networks
The operative environment of the Company, positioning the Company on the market and related
earning possibilities
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Case 1: Ring Tones
• Sounds easy:
• Product: Ring tones
• Customer: Mobile operator
• Price: Revenue sharing
• The truth: …
Value Chain of the Ring Tones
Operator End user Bill
Portal Aggregator
Record company
Artist Manager
Content producer
Operator Content
Aggregator
€
€
€
€
€
€
€
€
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Wireless Value Chain
CONTENT ORIGINATION
Contents production
CONTENT PACKAGING
Contents provider
INFORMATION INTER- MEDIATION
Contents aggregator
SERVICE ACCESS
Data center, ISP
NETWORK ACCESS
Cellular network
END CUSTOMER MOBILE INTERNET SERVICE PLANNING, MANAGEMENT & OPERATION
Mobile Operator
MOBILE EQUIPMENT &
DEVICE Manufacture
MOBILE EQUIPMENT DISTRIBUTION
MO, Retailer
NETWORK PLATFORMS TELCO, MO
INFRASTRUCTURE EQUIPMENT AND SYSTEM SUPPLY NEC, Panasonic, Mitsubishi, Nokia, Ericsson, Qualcom, IBM,…….
Partner cooperation model
What do we expect the partner to do?
What do we do?
How does the partner earn money?
How can we make our company look appealing?
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Work and revenue creation with xxx
Sales Support by Partner Technical
Support Services by Partner
7.
Lead Generation by ccc
Application Integration
Services by Partner
5.
TYPICAL CUSTOMER
CASE
1.
2.
3.
Implementation Services by Partner
4.
Training 5.
Services by Partner
6.
Maintenance
& post sales consulting by Partner
8.
Sales of concept by ccc
Phase 1:
We Partner
Training Roles and responsibilities Execution process Material
Support Revenue Targets
Measurement process and reporting Reaction
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Partner business case
Revenue source time/days daily price/€ charge/€
Technical services
• Installation 840
• Configurations 840
• Integrations 840
Consulting and Training
• Business process cons. 1000
• Training 1000
On-going services (per year)
• Tech. Support deal 1 500
• On-site support 840
Services total
Partners share of licences 10 %
Business value for Partner
Partner search, screening and selection
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Partner search
Identifying potential partners
Screening partners
Selecting partners
2
2 3
4
1 5
6 7
1 2
4
3 ?
Before entering to partner search process
• Partner profile and
• Partnering Proposition
should be done
Developing search criteria
• The analysis of the customer engagement process of the Company is a useful tool for defining the search criteria.
• It is important to identify partners
• willing to put effort in developing the joint business
• motivated of the opportunities provided by the Company
• no competing but synergic products in their product line
• good reputation among customers, suppliers, employees and trade associates
• for who the Company is also an important partner
• financially stable
• Personal chemistry (trust, commitment and bonding) is crucial
• It is important to be flexible with the criteria and to have enough alternatives.
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Typical failures
• Met accidentally
• Inexperienced
• No relevant clientele
• No resources to develop the joint business
• Minimal communication
• Hidden agenda
• the Company itself is not prepared and /or has no resources to develop and maintain the relationship
• Hugely expensive to get rid of wrong partners
¾ Do some homework in advance and avoid these unhappy circumstances
Tunnettuus
saksalainen asiakas
• En tunne teitä !
• En tunne yritystänne !
• En tunne tuotteitanne !
• En tunne asiakkaitanne !
• En tunne yrityksenne tavoitteita !
• En tunne yrityksenne mainetta !
• NIIN - mitä halusittekaan myydä minulle ?
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Partner meeting
Concerns of an American partner
• Are you a professional ?
• Is your product reliable ?
• What kind of marketing and sales material you have ?
• Does your product function with our product ?
• Do you bring added value to our customer ?
• Does our image suffer if we cooperate with you ?
• You represent a technology company – can you show us that customers are willing to pay for
your product ?
Beginning of a beautiful PARTNERSHIP
• Participate in the lead generation for your partner and help it to close its first deals
• Make the sales staff of your partner committed: meet as many sales person as possible
• Help your partner to find its position among high priority customers
• Make your partner committed in the level of planning and implementation
• Train the staff of your partner quickly and simply as possible (sales, support, management)
• Participate in the first pilots and deliveries
• If possible, give your products / services to the staff of your partner for usage
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