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By Andres Heuberger

There are good reasons why manufacturers look overseas for revenue growth

As U.S. markets for many products grow more competitive each year, many manufacturers are looking overseas for customer and revenue growth.

That means all is well on the export front, right?

Well, not quite. While the "global economy" may have arrived, there are many bumps in the road, and horror stories are commonplace:

• companies' globalization managers are struggling to keep up with ever-changing technology standards
• globalization cost overruns are rampant, and international profit margins often fall short of projections
• some markets are smaller than initially projected (sometimes small enough to fit all products sold there onto one conference room table)
• internal organizational strife has created an "us versus them" environment

The list goes on and on and the number of challenges and frustrations is great.

Why Bother With Foreign Markets?

U.S. companies simply cannot afford to ignore global markets if they wish to become (or remain) viable on an international scale. Despite the problems encountered, worldwide sales contribute substantial earnings to many companies' bottom lines.

Nonetheless, whether you are an established manufacturer or a small Internet startup, you will find yourself facing fundamental marketing, regulatory, and technology challenges as you expand abroad.

This article will identify some of these challenges and will discuss ways to avoid them or overcome them. Although there are no easy solutions and success often hinges on the combined talents and efforts of the departments affected, by following these guidelines you will be better prepared to enter foreign markets.

State the Mission

Why is our company going global? What are we looking to achieve? How does "international" fit into the company's strategy?

Too many companies enter the international marketplace without definite answers to these questions. The first move in avoiding missteps is to perform a thorough situation analysis. Senior management should typically consider the following areas:

• Market analysis. How many markets are under consideration? What products are currently selling in the markets under consideration as well as domestically? What are competitors doing? Do the selected markets support price points that allow for profit? What is the size of the market now and in the future?
• Organizational capabilities. Many companies lose sight of the demands that an international sales push will place on the organization. Does the required breath and depth of skills exist? What functions or departments need to be shored up with additional staff? Will internal politics and turf wars sabotage the venture? A company may simply be too small (or underfunded) to sustain this effort.
• Return on investment. Some companies are getting swept up in the mad dash to enter overseas markets without looking at the underlying financials. What capital expenditures are required? What will the impact be on company overhead? What is the projected ROI? What risk factors exist? What other investment needs and opportunities does the company have?
• Timing. The cost of rushing into a market too early (i.e., no market exists yet) must be balanced with the risk of entering too late (i.e., competitor are already established).
• Business objectives. Ultimately, management needs to evaluate how this effort matches up with the companies overall strategy and mission.

There are no "right" answers to these questions. The key is in thoroughly analyzing these issues and their implications before enacting a global markets strategy. This analysis should result in clearly defined milestones, goals, and objectives. The clearer the mission the easier the implementation-and the greater the odds of success.

Cross-Organizational Support

The situation analysis should result in the appointment of one person to spearhead the globalization effort. While different operations inside the company will need to cooperate, one person must have the responsibility and authority to carry out the mission.

Going global affects nearly all departments. While the international team leader may quickly come up with a solution and implementation strategy, that person's most important contribution must be to solicit the involvement of the affected parties. These typically include:

• Executive management: financial support
• Marketing: develop global brand, product/service mix
• Legal: international liability strategy and compliance issues
• Manufacturing: forecast and logistics
• In-country offices: market information, translation support

Provide Adequate Resources

When entering overseas markets, companies must support this effort with sufficient financial and human resources.

Exporting will make new demands on many different departments, including: legal, technical publications, manufacturing, distribution, marketing, sales, finance, customer support, and so on. The department managers need to be involved in the planning stages and need to have input into the allocation of their resources

Many of the functions affected by going international can be outsourced to third parties or suppliers. However, those relationships must still be managed and thus require internal resources as well.

When considering various options for resource allocation, in-country affiliates are an attractive option. However, companies often neglect to take into consideration the capabilities of affiliate offices:

• Nature of office. What function does the affiliate play? Is it a sales force or an inventory warehouse? Can there be sufficient staffing to take on additional responsibility?
• Processes. Are local staff trained and up-to-date on company policies and procedures? Are the relevant quality systems in place? Does the team include a quality or regulatory affairs manager?
• Translation management. While many companies prefer to control translation efforts centrally, it is possible to have affiliates assume responsibility for this function and to have them coordinate translation through in-country vendors. Alternatively, many affiliates act as reviewers of the translation vendor's work.
• Technology. Is the necessary infrastructure in place? Often, companies find that affiliate offices use hardware and software and systems that are different from headquarters and from other affiliates.

As these questions arise and are answered, the original solution will become more complex. By involving affected sites and departments in the planning, companies will be able to reduce internal politics and keep in-fighting to a minimum.

Hidden Costs

Dollars must be invested before marks or yen can be earned. Therefore, a detailed budget must be established early on. Some costs are easy to anticipate. However, not all costs are obvious. Some of the potentially unforeseen costs include:

additional travel, not just for executives and sales people but also for people in other organizations who need to make things work;

costs of gaining international regulatory approvals through multiple organizations, which may have different and occasionally contradictory requirements from domestic regulatory agencies;

the need to localize marketing communications as well as translating them (even though one might be able to get away with nearly identical content for technical documentation, this is unlikely for promotional materials, because what sells differs across the world);

the need or desirability to translate and localize at least some employee communications, depending upon the work force;

translation and localization of the company's web site;

the need to rethink the way the company develops products and materials to be more international, especially software and multimedia applications (i.e., designing them to make translation and localization easier, or, in some cases, possible at all);

need to educate people how to work with others from different cultures. If companies don't do it up front, they may pay in terms of missed schedules, misunderstandings, frustration, and seemingly unexplainable failures.

One of the most overlooked costs is currency risk. The graphic below shows the fluctuations of four major currencies versus the U.S. Dollar (source: Federal Reserve Bank of Chicago):

Currency fluctuations directly impact a company's earnings from overseas sales. Since most international sales are made in local currencies, the resulting U.S. Dollar revenues will rise and fall with the exchange rate. If stable currencies fluctuate this wildly think about how unpredictable the revenue stream from smaller markets will be!

Translation Management

Going global places significant strains on a company's processes-development, monitoring, quality assurances and many other areas are impacted. One of the changes that generates the most ill-will within organizations is translation management.

While most companies see translation on the critical path to product release they are often shocked by the demands. "It takes how long?" and "Translation costs how much?" are often-heard outcries, especially from companies that are new to selling to international markets. For these firms, translation is a necessary evil, required by various markets for nationalistic, political, and trade reasons.

On the other hand, more and more companies are beginning to see translation as an opportunity to speak to their customers and prospects in their native languages, thus demonstrating commitment to a local market and gaining a leg up on their English-only competition.

Whichever way you view translation, it is an integral part of selling products and services abroad. This begs the question "How do you minimize your translation headaches?" While an in-depth answer exceeds the scope of this article, consider the following six key elements:

1. Centralize translation management within your company. Depending on the volume of work, this can be a full-time position or part of another role. Ideally, this in-house translation manager will have some experience with technical communications and possess sensitivity to language issues. The translation manager should be well organized, ought to be willing to explain translation issues to company-internal users and clients, and must be able to resolve content or technical questions within the company.
2. Decide what to translate and then coordinate all work through one translation vendor. Combining instructions for use, operation manuals, marketing literature, sales support materials, packaging, online content, and labeling with one vendor will result in lower translation costs, reduced management overhead, as well as improved quality and consistency.
3. Carefully review and test potential vendors. At a minimum, your vendor should specialize in your industry and your technology.
4. Measure translation quality. Put in place a process to document, measure, and audit translation activities. To do this, both the vendor and the customer need to have auditable, documented systems in place. These systems should detail responsibilities, work flow, required documentation and approvals, as well as quality measurements (different organizations, including the American Translators Association, the German standards organization DIN, and the Society of Automotive Engineers publish standards for translation quality). Once vendor and customer agree on appropriate quality and performance measures, hold the vendor responsible for measuring and report this quality data.
5. Translation is still a human process. Despite efforts to improve machine-translation tools, the number of words to be translated dictates the amount of time required to translate a document. But you can do your part to limit turnaround times by "leveraging" past translations using a translation memory database, by limiting the number of project change orders after the project start, and by regularly providing your translation vendor with work forecasts.
6. Clearly define the role of affiliates. Beware of the temptation to have in-country affiliates or distributors do your translation. While some companies use this approach effectively, there are many more companies who are looking to minimize in-country reviews, let alone translation. Recently, the emergence of third-party reviewers to supplant affiliate reviewers have helped some device firms dramatically cut review times and, at the same time, improve the quality of the review comments.

Steer a Path to Profitable Growth

There are many hazards on the road to building a global presence. However, with the proper planning and dedication of resources, it is possible to circumvent these challenges and to steer a path to profitable growth in international markets. U.S. companies cannot afford to ignore international markets if they wish to maintain-let alone grow-their market position.

Andres Heuberger is an editor at multilingualwebmaster.com. He frequently writes on issues related to technology, translation, and regulations. Rants and raves can be sent to aheuberger@multilingualwebmaster.com.

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