Control your destiny through your growing stages…
Nowadays, I am actively involved in consultancy and advisory roles that lead to Mining, commodity trading, Shipping and Logistics businesses in African countries. In the various discussions last two weeks with prospective clients who seek advice on entry to markets in Africa, the points that have come out frequently and prominently are this week’s food for thought.
All industries go through cycles and phases. There are industries presently that are in the suffering mode where survival is key and tomorrow is uncertain. They find growth is a luxury. Some, especially in Asia, are seeing the best phase of their business. For them growth is a necessity. Such growth generally always means diversification of core business, core geography or core revenue streams. In the various discussions last few weeks with prospective clients who ask me advice on entry to markets in Africa, the points that have come out prominently are:
- a) Do a new business in your old place or do your old business in a new place.
Mc Donald’s (McD) can easily make market entry into over 100 countries if they continue selling what they sell but not if they try to compete in new markets with new products. Adaptation is different concept because McD still has to cater to local tastes and dietary requirements but the core business is the same. Change management is an underestimated concept in corporate structures who grow rapidly.
- b) The only risk in a new geography or new business is the counterparty risk.
The perception of risk is your understanding of an assumption you have made about an unknown. The risks in a B2B business are varied and it is clear that any new venture is a collaboration of different teams. You can peel the orange any which way but the resultant answer is that all risks can be categorized or handled as a counterparty risk.
- c) For market entry, control your destiny and not depend on contracts based on weak principles.
While asking companies to do old business in a new place, I also ask them to adapt to integrate upstream and down stream to the extent possible. There will always be change management and a counterparty risk. The long-term players have the vision and can appreciate the need for such integration. The traditional corporates I have seen, have the habit of standing outside the water and try to learn swimming by watching others swim. The true leadership in these companies understand a simple fact: “you never cross the ocean until you have courage to lose sight of the shore” (Christopher Columbus).
– Capt Pappu Sastry/ CEO – ASL
