Our client – a manufacturer of high-tech equipment – operates a service supply chain business model. It brings equipment into local markets, to serve clients who need a unit repaired or replaced.
Some of the African markets in which our client operates are growing so fast that it makes business sense to establish service centres or service replacement channels in those markets. But our client wasn’t certain if the countries could support its service supply chain business model, so it called BlueBlox for help.
When penetrating a new market, we advise clients to look at three crucial elements.
1. Local legislation
Trading models (i.e. buying and selling) are generally well described in local legislation. But there are many non-standard business models that are not always well described, like the service supply chain.
It’s important that local legislation encompasses and supports your business model. If not, you need to know where the gaps are, and what your strategy and approach will be, if you need to discuss your business model in light of the current implemented legislation.
2. Your operational approach
Although the service supply chain business model is well known in the international industry, it’s not always well known in the emerging markets. If you’re the first to enter the market using this model, it’s important that you meet with authorities, to explain what you’re trying to accomplish.
But before you do, research how operationally prepared the country is to support your model and gauge the extent to which authorities understand it. Also, research how developed the country’s Human Development Index (HDI) is.
3. Political and socioeconomic influences
Questions to ask – and answer – include:
- Is the country more interested in economic development or power?
- Is corruption an issue?
- Are regulatory and compliance factors understood and well implemented?
- How far developed is your business model within the market?
- Is the country open to your product?
Evaluate all of the above in relation to your business model and products.
We evaluated a number of countries for our client and developed a clear go-to-market strategy for each. This included possible challenges, recourse options, and what operational elements to implement, depending on whether the market was medium or high risk.
Our main advice is this: Do not attempt to penetrate any market until you are fully prepared. If you need help with planning, contact BlueBlox.