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Internet Newsletter of Fargate AG |
Release 40 · March 2008 |
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[SALUTATION] We enable Swiss SME's to enter new export markets. Our core compentence is the synchronoues multi-country export (see first article below). Inhalt:
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Funnel principle: multi-country export Thanks to the 150 Fargate satellites located in 40 countries across the globe, it is possible for Swiss SME’s to work simultaneously on several target export markets. This type of approach offers many distinct advantages. The three most decisive factors driving success at the time of setting up a new export business are commitment, time and luck. After about three years or so the export business either turns out to be tops or flops. Unfortunately, only a bare handful of enterprises can afford to wait so long for their expansion efforts to actually start bearing fruit. The funnel method: 20/10/5 The modus operandi for Fargate projects is to work in several countries at the same time and gradually zero in on the most promising ones by following a step-by-step procedure. Given below is an example of a typical Fargate project: - Satellites from 20 countries apply to the exporter. The bonus of deciding how many and which countries should qualify to proceed to the next level lies solely and exclusively on the company awarding the contract. The Fargate head office in Zurich dons the mantle of a general entrepreneur co-ordinating all the activities of the countries involved. To open sevaral options to get lucky As mentioned earlier, luck also plays a vital role in ensuring success for an export business. In this context the methodology adopted by Fargate gives luck as many chances as possible to prove itself. This procedure increases the success rate, reduces risk concentration and brings down the duration of “time to market”. Investment: 50 percent of personnel costs All this can be availed of at a SME-friendly budget: The investment to be made in advance for the services described above (20/10/5 countries over a period of three years) roughly corresponds to half the cost that would have to be incurred on an export manager. Added to that is the commission on the export turnover if the business meets with success. |
The funnel principle: The best target export markets and satellites are filtered-in through several project stages on the strength of concrete results.
Multinational meeting with a Swiss Fargate client (back f.l.t.r.): Fargate Satellites ESR (Bulgaria), AWE (Germany), JNE (Norway), ADH (Spain) und PJB (France). Front: Roger Zingg (CEO Contelec AG) with his assistant Fabienne Ursenbacher.
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Five rules for setting up an export business Stepping into the international arena can help many SME’s make a major breakthrough in their business. However, anyone who wants to tap new export markets would do well to keep a few ground rules in mind before taking up this challenge. Five distinct aspects have emerged from the numerous projects that Fargate has concluded so far and every SME should be aware of these before engaging in any strategic overseas expansion. Rule 1: Management decision Venturing into new markets holds many unforeseen pitfalls. Problems such as possible delays, setbacks and need for subsequent investments can only be weathered if export expansion is a definite and long-term goal of the company’s decision-makers. It must be borne in mind that there is a limit to how much an export manager can achieve as an individual; without proper backing from the company’s management he is bound to fail sooner or later. Rule 2: Three to five years Who hasn’t experienced the euphoria of returning from an international fair because they have been able to conduct diverse discussions with a host of «interested marketing partners»? What ultimately happens is that most of time that had been scheduled for starting a business with a respectable turnover gets expended at the initial building up phase itself. Our experience in this regard has shown that it would be more realistic to factor in around three to five years of preliminary work before something tangible can be expected. Rule 3: No spurt in profits New export transactions do not automatically translate into extra profits for the company right from the very start itself. On the contrary, market prices abroad are considerably lower than domestic prices as a rule. Nevertheless, the enterprise does reap benefits, albeit indirectly: the additional volumes generated have the effect of pushing down manufacturing and procurement costs. Besides, it has been observed that companies with an international presence are more likely to be healthier in domestic markets as well. Rule 4: Target export turnover = export investment Anybody wanting to test waters in a new country must be ready to invest. There is no set formula as such for standard investment budgets that could be applied across the board for all companies desirous of setting up an export business. However, there is one thumb rule that can be used here: any company striving to achieve an annual turnover of 100,000 CHF should plan a budget of the same amount distributed over a period of three years as a necessary investment towards the business. Rule 5: Top or flop Setting up a successful international business can be a do or die proposition with no room for error: one either stops all efforts after a certain period of time without having earned a single penny or one tastes success and goes on to earn substantial profits in the long-term. There is hardly anything worth mentioning in between apart from a couple of valuable experiences and insights gained in the process. |
Russian Fargate Satellite DRE (middle) meets Export Manager Peter Zahner (left) and CEO Erich Leutenegger of the Swiss market leader in backery ovens in Andwil (Switzerland).
Few months later: Fargate has identified an interested distributor in Russia. Distributors CEO (right) takes a look at the site, the products and the key persons of the Swiss manufacturer.
Another few months later: Russian advertisement on bakery ovens of the Swiss market leader. |
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Next Eleven: Emerging countries «Next Eleven» is the name given to the eleven countries which could see an economic boom similar to the one experienced earlier by the BRIC-countries, i.e. Brazil, Russia, India and China. Vietnam - a textbook case: This socialist republic with a population of 84 million joined the WTO in January 2007. After decades of a planned economy, the country is opening up to the West in a big way. Its economic growth rate pegged at close to 8 percent is only marginally lower than that of China or India; exports have recently seen a three-fold increase. The list of the «Next Eleven» countries: Fargate is represented in eight of these eleven countries by its satellites. |
Two Fargate satellites from the Next Eleven countries during their latest visit to Fargate headquarters at Zurich.
Vietnam Satellite BTR with Fargate Project Manager Robert Ehrler (left) and Daniel Isler.
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Funnel principle: multi-country export
