Welcome to B2B: Cross Country Growth Part 2. In an earlier segment, I talked about cross country opportunities. Of course, you also have threats in going abroad. And this is just a small laundry list of the many threats that a company may face such as being regulated. And so things like off-sets so which are common in some countries and some industry such as in defense contracting. May be prohibited. Not only locally but even in your host country. Countries will very often turn to infrastructure such as distribution or the lack thereof. And maybe part of infrastructure is the vendor qualification process. You may be qualified, you may be considered first tier. But maybe your suppliers, they too have to be qualified before you can use them. So if you have planned to go in with certain vendors, you may have to think again, because they may, again, be prevented from acting in some countries. You may face stiff competition with deep pockets. You may face different business culture, which I'll get into a bit later. And last but not least, you may have internal provincialism. Now what that means is other members in your company maybe your worst enemy, if they're not as globally minded as you are. So again this a kind of a check list that you may want to consider before you take the plunge of going abroad. Okay, an example of local business culture, and this, for some, will look very familiar because it's the very famous Hofstede model. And it applies to B2B marketing as well. In fact, I think what is not that well known is the original Hofstede data was collected and actually a business setting. So let's compare three countries and three regions. Here it's India, Germany, and Saudi Arabia in terms of the six indexes for Hofstede cultural dimensions of Hofstede. And even though we have similarities in terms of things like masculinity which kind of surprised me. So maybe gender will play less role in In marketing, not only B2C wise, or, even B2B wise. But, you find differences, in terms of power existence, in terms of individualism, in terms of uncertainty avoidance, and also in terms of long term orientation. So whereas Saudi Arabia is high in terms of the power distance and often trying to uncertainty avoidance. So they're low in terms of other things like individualism and long term orientation. And so what does this imply? So again, you can toy around with this, but just talking about the three countries mentioned power distance could imply important aspects of how centralized the decision making is. And in countries where power distance is high, that's normally the case. So in Saudi Arabia I think one may assume that there will be one key decider. Whereas power distance is low, or lower, as we saw in the case of Germany. Maybe that decision, may be shared. In terms of individualism, lower individualism may indicate that more people will be involved. Even though the decision maybe ultimately centralized. In terms of uncertainty avoidance that suggest very low tolerance for ambiguity. So that is where they may have rigid rules both written aswell as unwritten that are ensured to in countries like Saudi Arabia. And lastly in terms of long term orientation and countries like Saudi Arabia were it's low, maybe again they may honor old traditions in terms of how for example business is conducted. Such as pertaining to B2B. So again, even though these are generalized differences and you have exceptions to the rule, it can give you an initial guideline in terms of how to approach these countries, even from a B2B marketing stamp. Okay, how do we grow cross country wise. Well, it depends on the conditions or objectives that you have in mind. So we have four options here that are cited. Exporting, licensing. Joint venture and local production. But we also have the conditions that you're in in terms of how urgent do you want to enter into a country, a kind of long term profitability that you want to achieve, how much competition you have, the kind of cultural distance it creates by using one of these options And how congruent are you yo host government policy. So, you see all these differences between the various options, so again depending on the situation you're in it calls for different strategies, different options. So for example if you're really in a rush this table indicates that exporting and licensing may be the way to go because going into joint venture especially producing locally that will involve a lot of time. You'll also notice that there are trade-offs, such as in terms of things like speed and profitability. And so even though, locally introducing something will take time ultimately given the lower variable costs, valuable face. In the long run and especially given higher failed the potential profitability will be fairly higher for that option. Lastly we also have to think about the marketing mix. So the marketing mix is the product, price, place, and promotion. And the issues that almost the definitions of product, price, place, and promotion. And so the keyword here is equivalence. So we have to test whether the need definition is equivalent across countries, between home and your targeted foreign country. And likewise for price, whether the benefits and costs equation that was deemed appropriate at home is also the same abroad. Likewise for place in terms of the emphasize on the service add-ons. And finally, promotion in terms of the kind of promotion mix and the Of 5W emphasis that you want to place. That you assume to be right at home, but that assumption may be wrong abroad. So, summing up, global expansion is a choice. It's not something that has to be automatic, the conditions have to be right. You have to have the resources to match. We saw that there are a lot of opportunities, stemming from going abroad. But as many opportunities you had, there are equally as many threats that can be faced. And companies should align their growth options with their situations, as we saw in that table. And of course, because marketing has to be ultimately implemented with marketing action, with the marketing mix. We have to analyze how equivalent our marketing mix can be across countries.
