Editor’s note: Steve Wiehe is president and CEO of Cary-based SciQuest (www.sciquest.com), a supplier of management and procurement automation solutions. SciQuest will be a demo participant at the Council for Entrepreneurial Development’s (CED) InfoTech 2005 conference, set for Oct. 12 at the RTP Sheraton Imperial Hotel. Wiehe discusses international sales, a topic he will delve into further during a panel discussion at InfoTech 2005. This column is the latest in a series for LTW from the membership of CED.
_______________________________________________________________________________________Many domestic markets are challenged with flat or minimal growth while international markets are experiencing significant expansion. Whether you are growing a new business or considering expansion of an existing business, there are several factors to consider as you embark on an international growth plan. Following are three core principles to guide your planning.

Partner or Build

Do you partner or do you build? There are advantages and disadvantages to both so carefully weigh your options and decide what is best for your company, your product and your prospective customers.

Should you choose to partner, you will alleviate the need to establish a new office and the related support services a location requires. Additionally, you will not have to initiate and manage customer relationships, avoiding language and cultural barriers. Partnering appears to be the easiest move; however, it also has its disadvantages that should be carefully examined:

  • What problems or complications might you be exposed to in this type of relationship?

  • Can you trust this potential partner to make smart business decisions on your behalf and rightfully represent your product to customers?

  • Is insulating yourself one step from your customer the most efficient way to manage that relationship? How much access will you have to your customers?
  • Building in a foreign country can be complicated and expensive, but when managed properly, can provide the highest level of control and offers the best opportunity for customization according to your exact business needs and the region you are serving. When considering whether to build a foreign entity, take into account the following issues:

  • Where is the best place to outfit an office and how can you ensure success from the beginning?

  • Are the necessary resources and support available?

  • From a cultural perspective, what type of staffing and human resources-related issues might you encounter? What kind of language barrier do you face?

  • In your interaction with customers, what cultural- and language-related concerns might you need to consider?
  • Positioning Value and Pricing

    To position your value in a foreign market you must first determine product pricing. There are several factors you should weigh as you make your pricing determinations. For example, check competitive pricing, if available, in that region and survey prospective customers to gauge solubility. Be sure you understand how pricing changes are handled in specific regions, as acceptance levels often vary from region to region. Once you know your value, determine a pricing process and structure. For example, software growth is generally slow in the United States and tends to move with the GMP, but growth potential is much greater in several overseas regions. How might this affect your pricing, value and growth?

    Look to an international financial expert to assist you as you consider your pricing plan and how your plan will be affected by the tax structure and additional economic conditions facing the region you plan to grow in.

    Location, Location, Location

    Because of the diversity found in today’s global business practices, markets and economies, companies should consider a strategic marketing segmentation exercise into key regions and identify possible areas for expansion based on research regarding the affected product, its value, current availability in the region and demand. Additionally, it is wise to consider economic problems facing your target regions, potential future issues, and how those issues might affect your business.

    Some considerations when looking at any region include:

  • Is there a need for your product in a particular region? If so, what factors influence this need?

  • Who are your competitors, where are they based, and are there differentiating factors for you in a particular region?

  • Are similar product-offerings available and if so, can you offer a price advantage over local providers?

  • What is the general economic forecast in this region? How stable is the environment?

  • Whether you choose to build or partner, is the required support infrastructure available in this region?

  • Where within this region would be the most strategic place to locate and why?
  • Careful preparation in the beginning of international expansion is the key to success as you build your business in a new market. Take your time, do your homework, engage outside support and resources and you’ll be on your way to global victory.

    As SciQuest’s president and CEO, Steve Wiehe is directly responsible for the management, growth and success of SciQuest’s business operations. Prior to SciQuest, Wiehe served as Senior Director – Strategic Investments & Mergers and Acquisitions at Cary-based SAS Institute. He joined SAS in June 2000, after SAS acquired DataFlux Corporation, where he had served as president and CEO. Before joining DataFlux, Wiehe had been Managing Director/Europe and Senior Executive Vice President for SunGard Treasury Systems, a division of SunGard Data Systems, Inc., and President and Chief Executive Officer of Multinational Computer Models, Inc., which was sold to SunGard Data Systems in 1998.

    During CED’s InfoTech 2005 conference on Oct. 12, Wiehe will be speaking on a panel entitled “Crossing Borders: Best Practices in International Sales Expansion.” For more information on InfoTech 200, see: www.cednc.org/infotech