Denzil Rankine chaired a CEO Roundtable at the Annual Conference Summit in London. The major topic was how to manage international expansion
The international expansion of successful events is a proven way to drive growth. The most striking point to emerge from the roundtable was the variety of available approaches taken by organizers. Obviously there is not necessarily a “right way” to internationalise, and various approaches can succeed.
The roundtable participants used a variety of internationalisation routes. These reflect the local markets that they are entering as well as their skills, resources and the level of risk that they are prepared to take:
- From head office eg London
- Local agent
- Joint venture
- Own local office
- Acquire a business
Organising from head office is seen as a first step, the trade–off being between full control and in-country presence with local knowledge and contacts. Agents are then a popular route, but results are highly dependent on people choice, capability and motivation. In riskier countries joint venture and franchise are used effectively. Acquisition gains the greatest control, scale and presence, but is expensive and carries its own risks.
The reactions of the various CEOs showed that one man’s meat can certainly be another man’s poison. For example the franchise route, which is designed to open remote cities in tricky countries and then lead to a buyout after three years raised numerous eyebrows.
Franchise and joint venture can both be very effective beachheads for ambitious market entrants, but exit should always be planned as these structures will inevitably evolve as one partner out-grows the other. In fact, this is the case for all international development; it is all well and good to make the first step, but a broader plan is essential. For example, Reed Exhibitions became market leader in Brazil through a planned progression through partnership, joint venture, minority stake and eventually acquisition.
Finally, the universal driver behind success, disappointment and any proposed structure is people. This is not the place to compromise or make-do. Partnerships require strong relationships that will endure the stress of developing long-distance growth challenges.
Checklist for successful internationalisation:
- Be patient, do not jump on the first opportunity
- Consider the risk / reward trade-offs and fit within strategy
- Consider a range of routes, considering non-obvious approaches
- Have a two or three step plan that caters for growth, strategy changes and outgrowing the current structure
- Make sure that you can work effectively over time with local people, that you are on the same wavelength with aligned goals