The Elusive Prize – achieving a Common Corporate Identity when expanding overseas

by Oliver Dowson, CEO, International Corporate Creations Ltd

When expanding abroad – especially when setting up operations like Shared Service Centres that will take over work previously done in-country – there’s always an aspiration to achieve and maintain a common “Company Culture”. Unfortunately, many companies fail. I’ve met with management of many international subsidiaries of multinationals all around the world – and conclude that finding common corporate identity at the human level is disappointingly rare. Often it feels like the only thing that’s common is the logo over the reception desk!
This is nothing new. On my first day at work for a US multinational in London, long ago, I received a telex from my new opposite number in Minneapolis welcoming me and asking me to send him some stats for the UK company. I asked my boss how I should reply, and he screwed up the paper and threw it in the bin. Stunned, I asked “and?”. “And you wait and see if he remembers to ask again. If you get a third reminder, I’ll explain what to do” came the answer. I found out that the London management mantra was that “the money might be American, but here it’s a British company”.
Years later, in a new job, I was reminded of this at the German HQ of a US car manufacturer. Waiting in the lobby for a meeting, I watched a workman put up a new corporate poster – and then carefully stick the German company’s logo over the corporate one. Reversing nationalities, I’ve had executives of the US subsidiaries of two of the biggest German companies tell me that they try to ignore anything coming from Frankfurt or Munich.
Therefore, when I started to take my own businesses abroad, I resolved to make it a priority from the outset to try for “one company thinking”, for which the key is to get everyone respecting each other and working together.
It’s not so hard where the new overseas operation is a sales office, or is dedicated to expand the business with a new market, product or service. The real challenge comes where work is being transferred abroad – for example, taking accounts processing or customer call centres to a lower cost economy. Whilst most companies dedicate effort to inspiring the new overseas workforce with the corporate identity and values, many pay scant attention to staff in existing operations, except those destined to lose their jobs as a result of the change.
Overseas expansion and business change is actually a great opportunity to build global corporate identity at all levels. Staff at the new overseas operation can probably be enthused quite easily, but the home office always needs great care. Even those not affected directly may have negative feelings, perhaps because they have friends in an affected department, perhaps because they fear they “will be next”, perhaps because they think they will end up with more work to do – or perhaps simply just because they are prejudiced (almost certainly unjustifiably) against the country in question.
The approach I’ve used and recommend has several elements. Fundamentally, you need to make your management teams understand that the move will not only make the company stronger, it will make their jobs easier, and they will be able to deliver better results, making them look good.
• When you set up a new overseas operation, don’t just use it to transfer work abroad. Add a small number of staff that will work on exploiting the new base to expand your company’s market, or to deliver extra services back to the home base that are new and valuable.
• In conjunction with that, establish people in both operations – home and abroad – who will need to depend on and communicate with each other every day. Pick individuals who are likely to build a rapport and share a little social chit-chat (this can dictate who you hire for the new overseas operation).
• Hire better-educated staff for your new operation than you actually need
• Consult your management team about the job functions that you may have previously cut out in your home country to make savings, and that have loaded extra work onto them – then re-staff them in the new overseas operation.
• Educate the home office staff (all of them) about the country and city where you’re establishing your new operation, and the people you’re hiring. Admit to making efficiency savings, but also make it clear that your company is deliberately trying to help the development of the country you are moving work to. Give as many of them as possible the opportunity of visiting the new operation – but only once it is up and running smoothly.
• Don’t switch over operations until you have fully QA’d the entire operation. If it doesn’t work perfectly from Day One, you’ll have to climb the mountain again.
• Never forget time differences! Don’t expect overseas staff to always have to work unsocial hours to fit in with the home office – try to compromise on scheduling.
• At least for the first year, directors or senior management should play the role of Company Evangelists, visiting the overseas operation regularly, and spending at least a few days each time getting into details and meeting all the staff – and then spend time reporting back to the home office team when they return.
There’s never a single solution, of course – but all of these ideas have been proven to work. Another set of ideas apply to how you should manage corporate identity in your new overseas operation – but that’s a subject that needs another article!

 

THE ICC DIFFERENCE

by Oliver Dowson, CEO, International Corporate Creations

People often ask me “What’s your USP?”.  I’m increasingly realising that it can be difficult for others to understand how ICC is different to other professional services – and difficult for us to explain concisely!  So I’m going to take a stab here at getting the message across more clearly, specifically for one of our core services of setting up new overseas business operations.

My “elevator pitch” is that, unlike other professional services, we put ourselves in the position of each client, and act as if we are spending our own money, prepared to undertake each step of the process ourselves.  We don’t just tell companies what to do, we’re actually prepared to do it.  So we have to give complete, accurate and practical details.

But that’s compressing a big project into a few words, so for those who are interested (and I hope that includes you, since you’ve read this far), here’s a more detailed explanation.

International Corporate Creations is unique in its approach to helping its clients expand globally through research and implementing the creation of new wholly-owned subsidiary and Joint Venture companies in any country of the world.

  • Before starting each project, we immerse ourselves in understanding our client’s business and their approach and objectives, to ensure that the recommendations we make are those that we would choose ourselves were it our own business.
  • We aim to think of absolutely everything that our clients need to know and act on
  • We always look for the most cost-effective solution, using trustworthy and reliable local service providers and partners in each country and location that our clients want to enter.
  • We’re not a conventional consultancy. We don’t just make recommendations, we’re ready to act on them.  Nothing is vague, everything is detailed.  If a client wishes, we can implement every step to deliver their new international business as a turnkey solution.
  • When we set up a new international operation, we QA every step to ensure that everything will work perfectly from the first day it opens for business.
  • We endeavour to quote firm, fixed prices for our services for each stage of each project. Where we cannot do that, we make that clear upfront, with the best estimates we can.

Setting up a new Overseas Operation

We divide setup of a new operation into three stages.

FIRST STEPS (STAGE 0)

This stage costs nothing, and carries no obligation.  Our objective is to prepare a proposal for the next stages – but if we find that a project won’t work, we’ll be honest enough to say so.  Usually this stage includes:

  • Exploratory meetings with the client, by WebEx or face-to-face
  • Further research and understanding of the client’s business sufficient to ensure that any Proposal that we submit is likely to be suitable
  • Our team brainstorms alternative solutions for the most appropriate and cost-effective solution for the client
  • Exploratory discussions are undertaken with ICC contacts in the relevant country
  • Initial research into legal and regulatory issues, restrictions and competition, to try to avoid any foreseeable hurdles
  • Project evaluation by ICC team
  • Preparation of Report and Proposal
    • Includes fixed price proposal for Stage 1 (next steps) which would be chargeable
    • Includes timeline for performing Stage 1
    • Includes a general indication of Stage 2 (if stage 1 approved)
  • Presentation to Client – findings of Stage 0 and Proposal for Stage 1 – and Agreement on Next Steps

RESEARCH & ANALYSIS (STAGE 1)

This stage creates a complete model, not only of how to create an overseas subsidiary or JV company, but of how it will work in the future.   Depending on country and complexity, this typically takes 6-12 weeks, keeping the client informed of progress on a weekly basis.

  • Detailed market study
  • High-level discussions with client to agree approach to different aspects of the project and understand corporate methodologies and objectives (Finance, IT, Marketing)
  • Analysis of alternative business locations (country and city) and recommendation of the most suitable one(s)
  • Research and analysis of relevant business legal, regulatory and employment issues in sufficient detail to enable fully-informed business decisions to be taken
  • Identification and selection of suitable local business partners (legal, accountancy, real estate, HR, banking, etc), usually located in or near the recommended destination city
  • Analysis of IT infrastructure requirements and any issues
  • Evaluation of employment situation (availability of staff with suitable technical and language skills, local competition and retention risks, salary levels and other employment costs. Recommendation for methodology of recruitment and salaries and benefits to be offered.
  • Evaluation of training requirements and where this would be done (bring trainer to country or take staff to home base)
  • Infrastructure and costs for future client routine visits – transport, hotels with corporate rates, etc.
  • Fully detailed costing for Stage 2 Actual Implementation (as accurate as is possible)
  • Detailed step by step costed operational plan for the first full year of operation, including all necessary bureaucracy, legal documentation, financial plan, recruitment, training, local promotion and marketing.
  • Detailed “Road Map” and proposed timetable for implementation and first year operation. ICC use their skill and experience to identify steps in setup that can be carried out contemporaneously and that therefore make the overall setup process as efficient as possible
  • Stage by Stage client update meetings (usually by WebEx)
  • Detailed business “Model” presented as a fully-illustrated Report on conclusion of Stage 1
    • Exactly what the business would look like on Day One
    • What it will look like after 3 months
    • What it will look like after 12 months
  • “On the ground” presentation – face-to-face meetings at the recommended destination location, with presentation of the detailed business models mentioned above, meetings with suggested local business partners, visits to competitors or similar operations where possible, visits to possible office/property locations, etc. These meetings would be spread over 1-3 days depending on the size of the project, and have the objective of ensuring that ICC’s Stage 1 Report is clearly understood and all client questions are completely answered on the spot.

MAKING IT HAPPEN (STAGE 2)

At the completion of this stage, our client will have a fully-operational overseas company!

  • Research and implement any modifications to the Model developed in Stage 1 as required by the client
  • Agree implementation plan with client – refine timescale to adjust to client needs and objectives and decide “who does what”. ICC are willing to undertake the entire implementation of setting up an overseas operation for a client, but most clients want to be involved to varying degrees, and every country and project is different, so there is no single model for this stage.
  • Carry out implementation of project to set up overseas operation following the step by step plan developed in Stage 1. Typically this will take between 3 and 6 months and include
    • Business legalisation (including company name registration, regulatory matters, tax registration, etc)
    • Banking arrangements
    • Contracts with local business partners for accountancy, legal and other required services
    • Business premises acquisition and furnishing
    • Staff recruitment and training
    • IT infrastructure acquisition/import and installation
    • Communications (telephone, internet, etc)
  • QA – we test every step of the way to ensure that everything works the way it should
  • Complete Transparency Guarantee – When things don’t happen as expected, we consult with our clients immediately and adapt the plan to overcome issues and get back on track as efficiently as possible

At ICC we offer a host of other services revolving around the creation and management of overseas operations of all kinds, in all countries of the world.  We aim to take a similarly comprehensive approach to all of them.

 

Iran is back in the game

by Yvonne Rivera, International Business Strategist at ICC

For many years now, Iran has suffered commercially due to extensive sanctions from the UN, and it was due to this that UK companies were unable to conduct much trade with Iran.  However, last year on 14th July 2015, the E3+3 (France, Germany, UK, China Russia and USA) announced that they had reached an agreement with Iran on a nuclear deal which gave Iran the opportunity to demonstrate to the world an exclusively peaceful nuclear programme, and that as a result many sanctions would be lifted.

Therefore, since 16th January 2016 there are now fewer sanctions due to the International Atomic Energy Agency confirming that Iran had completed all necessary steps to reach “Implementation Day”.  It is important to point out though that some sanctions not affected by the nuclear deal remain in place, in particular those related to human rights and support for terrorism.  Primary US sanctions, including the US trade embargo, also still remain in force.

As far as we know at International Corporate Creations, EU trade with Iran before “Implementation day” already stood at $8bn/year, and this is now expected to multiply by 4 over the next couple of years.  In view of these recent developments, the UK Government is fully supporting the expansion of UK-Iran trade and investment relations, and encouraging UK companies to benefit from business opportunities that may arise.

In my opinion, this is a huge market opening for UK businesses looking to expand internationally.  Iran is the second largest economy in the Middle East after Saudi Arabia, with an estimated GDP of $397bn.  It is also the second largest in population at 80 million.  Opportunities for UK businesses should arise across all major economic sectors like energy, automotive, airlines, manufacturing and consumer goods.

That said, having read articles on this topic, many comment on the multiple challenges that UK companies might be faced with when doing business in Iran such as corruption, bureaucratic delays, inflation or price control.   These are common when starting business in new markets, as unfortunately not all destinations are straightforward, but in my opinion this should not discourage UK companies looking at entering the Iranian market.  Other more complicated factors depend on the type of business activity and a company’s other existing international markets.

Currently travel between the two countries is not as easy as we would hope, mainly due to the visa requirements and the fact that neither the Iranian Embassy in the UK or the British Embassy in Iran offer visa service.   Iranians still need to apply for visas in Abu Dhabi or Istanbul, and British citizens need to apply for visas at the Iranian Embassy in Dublin or Paris.

So if you are looking to expand or invest in Iran, please come and talk to us at ICC where would be more than happy to discuss the specific factors you need to be aware of to help your business succeed, ensuring that the appropriate due diligence measures are taken before engaging in any activity.

To discuss in more detail, call me on +44 20 7278 9210, or email info@internationalcorporatecreations.com