For many AV firms, the prospect of expanding beyond the United States is often inspired by the conclusion of a successful project: a loyal domestic client requires design and integration services overseas and takes their favorite AV provider along for the ride. Once on site, the AV provider in question sees the potential for generating more business in this foreign locale and wonders, “What if we set up shop here?”
“The first thing you have to do is make sure that there’s a need––not that you think there’s a need, but that you know there’s a need,” said Joseph F. Paris, chairman of the global business consulting firm Xonitek and author of State of Readiness: Operational Excellence as Precursor to Becoming a High-Performance Organization. You may believe that your services are better than those currently offered in a given market, but how superior are you? “It’s very, very difficult to displace an incumbent with something that’s a lateral choice. It’s got to be something that’s substantively different.”
In other words, if you open up shop abroad, will there be enough customers who will buy your services? “You really have to know your customer, and you have to know your product, and you have to know that the two are going to be married up wherever it is that you’re going,” Paris said. To conduct a thorough assessment, company executives must spend time in the region––he recommends a month––to learn how things really work there.
In determining the new market’s potential, Paris urges companies to be pragmatic. In many cases, he says, organizations will overestimate market potential while underestimating the necessary investment they’re going to have to make. “It’s going to cost two times more than you think, and that’s if your initial estimates are reasonably good––and you’re not going to make as much as you think you’re going to make on the top side,” he said.
Anda Malescu, founding partner at Malescu Law in Miami, FL, works with both U.S.-based companies seeking to establish themselves abroad and foreign firms that wish to set up a U.S. presence. She noted that one of the elements executives fail to pay enough attention to when expanding to another country is culture. “Every country has its own culture and its culture of doing business––the way people speak, the way business is conducted, the values of doing business,” she said. She advises companies to take the time to research business culture, as well as general culture––and even the country’s history––before jumping in. “That’s one aspect that is often overlooked, and it determines, really, the success of that U.S. company going abroad.”
The Global Presence Alliance (GPA) works with AV solutions providers worldwide in the interest of providing global enterprises with a single source for all of their audiovisual requirements. Byron Tarry, executive director at GPA, noted that the acknowledgement of these cultural differences is crucial in successful global expansions. “When a U.S. company has a global footprint and starts to push down a centralized standard to their teams around the globe with little perspective on how those different regions work, you’ll get resistance,” he said. When one considers all of the other potential pain points that surface during the course of any normal project––dissent among the client’s own stakeholders, or even among trades––a lack of cultural understanding serves to intensify these already significant challenges.
For Paris, two of the biggest challenges that expanding U.S. firms face abroad are taxes and regulations––especially labor laws. He cites the state of New York as an example, describing it as “pretty much an at-will employment state: I want to hire you, I’m going to hire you; if I want to fire you, I’m going to fire you.” While it’s better business to recruit well in the interest of not having to dismiss an employee, “if I have to, I have that opportunity [in the United States]. You don’t have that opportunity too easily in Europe. You have to be prepared for that. It can be a very, very rude awakening.”
This is one of the main reasons that Paris advises U.S.-based companies to partner with firms that are already on the ground. “There’s no need for you to create a company [in another country] and then have to create the HR––and, by the way, every country has got its own little HR nuances,” he said. “Whoever’s already [in that country] already has that experience under their belt. You don’t have to learn it—it’s not your core, it’s not a value-add.”
But finding a partner is a challenge in and of itself. If you are unfamiliar with the market, how do you know whom to trust? PSNI Global Alliance strives to assist U.S.-based AV integrators in this exercise by giving them access to its network of AV providers scattered around the world. “For all of the reasons involved––currency, logistics, time considerations, processes––for all of those things, they’re much better off selecting a partner,” said Chris Miller, executive director, PSNI.
Tarry underlines that in any business venture––but especially when both projects and clients are far-flung––there is the core human element to consider first and foremost. “In communities, people do things for others because they want to, not because they have to,” he said. Those who take the time to develop meaningful relationships on the ground stand to get better results than they would have if it had just been a matter of giving orders, he argues. “Certainly there’s process and structure that needs to be built … but you absolutely have to balance that with the human element, the community element where people are actually invested in each other’s success. And they’re invested not because they’re going to make a bigger commission or they’re going to get their paychecks, but because of the human relationships that they have with each other.”