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Will Your Competitive Advantage Work in Other Markets?

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When building a business, the critical first step is to develop a strategy that resonates with your market. But once you’ve crafted that winning strategy, what does it take to successfully translate it into new markets?

When companies expand overseas, they often assume the competitive advantages that have made them successful in their home countries will seamlessly transfer into new global markets. And indeed, this can sometimes be the case. For example, Sequoia’s existing brand resonated well with Indian entrepreneurs, and so its expansion into the Indian market required minimal adaption. Similarly, Intel has achieved lucrative returns selling semiconductors to customers in China because its chip design and manufacturing technology is hard for competitors to replicate.

However, not all competitive advantages translate quite so smoothly. Through more than 100 in-depth interviews with executives at multinational corporations based all around the world, my team and I found that there are three primary factors that determine whether a competitive advantage will transfer into new markets: the local competitive landscape, local customer preferences, and the extent to which a company is willing and able to adapt to meet those local demands.

1. Local competitive landscape

The first common hurdle we identified was differences in competitive landscape. You may have successfully beat out the competitors in your home market, but that victory doesn’t necessarily translate to other markets, which may be home to other competitors with different strengths and weaknesses.

For example, despite its success in many global markets, Starbucks lost $143 million in the first seven years of operations in Australia, ultimately forcing the company to close 61 of its 84 Australian stores. What happened? There were several factors at play, but a major flaw in Starbucks’ strategy was its underestimation of Australia’s rich coffee culture. In contrast to other markets in which customers were less familiar with coffee as a “lifestyle experience,” Italian and Greek immigrants had developed a vibrant coffee scene in Australia dating as far back as the 1940s and ‘50s. By the time Starbucks entered the market, it was competing with a wide variety of independently owned coffee shops that offered more flavors at lower prices, and that already had strong brand loyalty among Australian customers — a vastly different landscape than what the company was accustomed to at home.

2. Local customer preferences

Differences in competitive landscape often go hand in hand with differences in customer preferences, as competitors respond to (and in some cases, create) demand that diverges from a company’s home market. As a result, a product that’s appealing to consumers in one market may be utterly irrelevant in another.

Walmart ran into this issue when attempting to expand into Brazil. The retail giant had been successful in the U.S. largely because it offered customers the convenience of a single shopping destination for a broad array of low-cost products. But Brazilian customers were more willing to spend time actively looking for coupons, discounts, and other promotions, and they were accustomed to going to multiple stores to get the best deals. As a result, Walmart’s value proposition was less relevant for them, and so the company struggled to gain traction in the market.

3. Willingness and ability to adapt

Of course, neither differences in competitive landscape nor in consumer preferences are insurmountable challenges — but a company’s willingness and ability to adapt to those differences will make or break its success in a new market. In some cases, a company may be interested in changing aspects of its product or business model, but struggle with implementation. In others, a company may be unwilling to make those changes at all, whether for moral reasons, cultural factors, or other concerns.

Amazon executives we interviewed, for instance, described a deeply ingrained company value of always putting the customer first. This has helped the company achieve massive success in many markets — but it has also made Amazon extremely resistant to changing elements of its product in ways that might harm customer experience.

Specifically, for each product listed on its platform, Amazon uses a complex algorithm to choose just one vendor to feature on that product’s “Buy Box” (that is, the box on the right side of the product page where buyers can click “Add to Cart” or “Buy Now”), with all other vendors relegated to a list below the Buy Box. U.S. sellers were accustomed to dealing with opaque algorithms like this, and they were willing to put up with it because of the smooth user experience it offered buyers. But Chinese sellers found the Buy Box concept complicated and inaccessible, and so they chose instead to sell on local ecommerce platforms without such restrictive systems, such as Taobao or JD.com. Amazon received this feedback, and it certainly had the technical capability to remove the Buy Box or feature other vendors more prominently. But because of its core principle of “obsession with the customer,” the company was unwilling to make those changes, since leadership felt strongly that featuring just one vendor was best for buyers. This ultimately limited its ability to attract sellers (and in turn, buyers) in the Chinese market.

So, how should leaders react when a strategy fails to translate in one of these three ways? The first step is always to acknowledge the problem. That’s often easier said than done, especially if your company is committed to a product or business model that has been extremely successful in your home market — but you can’t improve your globalization strategy if you don’t first recognize its shortcomings.

Next, once you’ve acknowledged that something isn’t working, you can respond in one of three ways:

Adjust existing offerings

In some cases, it’s possible to make minor adjustments to an existing strategy to bridge the gap between your home market and local conditions. Starbucks, for example, eventually accepted the reality that its typical business model wasn’t working in Australia. Instead of continuing to fight a losing battle with its direct competitors (well-loved coffee shops that targeted local customers), Starbucks pivoted and began targeting international tourists in Sydney, Melbourne, and other popular vacation spots. These tourists were already familiar with the Starbucks brand, and before the pandemic, they accounted for more than one third of Australia’s population — making them a sizeable and much more promising customer base.

Similarly, Chinese smartphone maker Xiaomi had achieved success in its home market largely by selling via online channels. But when the company expanded into Europe, it hit a wall, since the majority of European customers were used to buying cell phones in person. Once Xiaomi realized its online sales model wasn’t working, it partnered with cell phone carriers and retailers and even opened its own physical stores to build sales channels that would be more effective in the new market. And this approach worked: Today, Xiaomi is the third largest smartphone vendor in Europe.

Develop new competitive advantages

In other cases, a small adjustment won’t quite cut it. When a given competitive advantage simply won’t transfer to a new market, it may be necessary to develop an entirely new approach. For instance, executives at Indian mobile ad company InMobi shared how they relied on its technological superiority as its key competitive advantage in its home market — but in China, internet giants with far more technical resources made it impossible to compete on the tech front. Once InMobi saw this, it decided to shift gears and instead focus on leveraging its strong global reputation to develop a vast network of partner apps and advertisers. As a result, although local competitors quickly matched InMobi’s technical capabilities, InMobi was able to build partnerships with more than 30,000 local apps and eventually become the largest independent mobile ad company in China.

Korean automaker Hyundai encountered a similar problem, and took a similar approach to addressing it: The company found that Chinese automakers were able to design products of a similar quality level as Hyundai, and at a lower cost. Since it was no longer able to rely on price or quality as a core competitive advantage, Hyundai began investing heavily in branding, working to elevate its brand among Chinese consumers who still perceived Chinese-made cars as less premium.

Leave the market

Finally, in some cases, the best decision is to cut your losses and leave the market entirely. Especially if you’ve already found a business model that works well in other markets, you might be better off focusing your efforts there, rather than endlessly attempting to expand into markets that just aren’t panning out.

Amazon, for instance, realized that winning the Chinese market would require both enormous resources and changes to its core product that it simply wasn’t willing to make. At the same time, it was already enjoying jaw-dropping returns in the many of the other markets in which it operated. As a result, Amazon’s ultimate decision to leave China was probably the right move. Similarly, Walmart’s annual revenue in Brazil accounted for only 1.4% of its total global revenue — so after seven straight years of net losses, Walmart made the decision to leave Brazil and focus its resources on more-promising markets.

Developing a competitive advantage that’s effective even in just one market is no small feat. Unfortunately, local success is still not a golden ticket to global dominance. Even if you’ve come up with a business model that works at home, there’s no guarantee it will translate into other markets, as differences in local competition and customer preferences, as well as your own organization’s willingness and ability to adapt, can all influence your chances of a successful international expansion. The good news is, if you acknowledge the problem, it’s possible to make large or small adjustments to address it. And if all else fails, remember that leaving and finding opportunities elsewhere is not necessarily a bad choice. Different markets pose vastly different challenges, and it’s up to each individual leader to identify the potential obstacles associated with a new market — and chart the best course to overcome them.

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Managing people

Four Effective Tips to Improve Labor Management in Companies

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Businesses worldwide are always on the hunt for ways to improve their processes and add more efficiency to day-to-day functions. Of course, labor management is one of the major aspects of every company that demands continuous attention and improvement.

Every business understands that effective labor management is essential when it comes to increasing the productivity, safety, and efficiency of every project. The managers bear all burden to ensure that the labor is working effectively to meet the needs of supply and demand chains.

Here are some effective ways to improve labor management in your company for the best of your business.

1. Use Standardized KPIs

It can be hard to hold someone accountable for their performance when there is no evidence to back up the claims. In such circumstances, the labor deserving of praise may be left out, and those who need improvement may continue to waste company time and resources. Of course, such practices can cost you a lot of time and money in the long run.

Hence, smart companies worldwide are using Key Performance Indicators (KPIs) as a tool for worker motivation and accountability. These indicators help them better understand why certain standardized goals exist and their role in making the company succeed.

2. Incorporate a Software

Managers have a lot on their shoulders in addition to managing the workforce. A few people cannot keep an eye on everyone throughout the day. They need Kaizen Software to find the best solution for labor management. This way, the managers can find time to pay attention to many more important matters.

Efficient management software is being used worldwide due to its countless benefits. They offer security, better communication, and enhanced tracking to make your business more efficient. Hence, your business will have a better opportunity to grow and bloom.

3. Ensure Safety at the Workplace

Every workspace has its own challenges. However, everyone can agree that industrial workers have more challenges when it comes to safety. After all, they are surrounded by heavy machinery and face increased chances of accidents, injuries, and even fatalities. Hence, it must be a top priority to make your workplace safer.

You can start by looking into the hazards in your workspace and minimizing them one by one. In addition, it is also important to ensure that all your workers have access to safety gear at all times. Caution can save more lives than building an elaborate regime to care for injured workers.

Managing industrial workforce

4. Keep Workers Posted

Whether a construction site or a chemical industry, there can be new hazards and precautions for workers every day. A little negligence in the workplace can lead to a regrettable accident. Hence, it is always a good idea to keep your workers informed about current events.

Knowledge about company procedures and safety rules can reduce insecurity among workers and increase their efficiency. It is best to let your workers know that all their questions will be answered. This way, they can feel more comfortable seeking your guidance instead of finding out by trial and error.

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Managing people

10 Key Strategies for Managing and Engaging your Employees

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Effective employee management and engagement are crucial for small businesses to foster a positive work environment, maximize productivity, and retain top talent. Small business owners need to prioritize their employees’ well-being, provide growth opportunities, and create a culture that promotes engagement and collaboration.

Here, we will explore ten strategies and practices for employee management and engagement in small businesses.

1. Clear Communication and Expectations

Clear communication is vital to set expectations and ensure alignment between the business and its employees. Regularly communicate goals, priorities, and performance expectations to your team. Provide feedback and recognition for their achievements and address any concerns or issues promptly. Encourage an open-door policy and create channels for open dialogue and feedback.

2. Training and Development Opportunities

Investing in training and development opportunities for your employees demonstrates your commitment to their growth and success. Identify areas where employees can benefit from additional skills or knowledge and provide relevant training programs. This can include workshops, conferences, online courses, or mentoring programs. Encourage a culture of continuous learning and support employees’ professional development.

3. Employee Recognition and Rewards

Recognizing and rewarding employee contributions is essential for fostering motivation and engagement. Implement a recognition program that acknowledges outstanding performance, teamwork, and achievements. This can include verbal praise, written appreciation, or tangible rewards such as bonuses or incentives. Regularly celebrate milestones and accomplishments to show appreciation for your employees’ hard work.

4. Work-Life Balance and Well-being

Promote a healthy work-life balance and prioritize employee well-being. Offer flexible work arrangements when possible, such as remote work options or flexible scheduling. Encourage breaks and time off to prevent burnout. Provide resources and support for physical and mental well-being, such as access to wellness programs or employee assistance programs. Show genuine care and support for your employees’ overall well-being.

5. Foster a Collaborative and Inclusive Culture

Create a collaborative and inclusive culture that values diversity and fosters teamwork. Encourage open communication, idea sharing, and collaboration among employees. Foster an environment where everyone feels valued, respected, and included. Embrace diverse perspectives and leverage the unique strengths of your team members to drive innovation and growth.

Getting feedback on employees

6. Performance Management and Feedback

Establish a robust performance management system to set clear goals, provide regular feedback, and evaluate employee performance. Implement regular performance reviews to discuss progress, identify development areas, and set new objectives. Provide constructive feedback that focuses on both strengths and areas for improvement to support employee growth.

7. Empowerment and Autonomy

Encourage autonomy and empower employees to take ownership of their work. Delegate responsibilities and provide them with the necessary resources and authority to make decisions. Encourage innovation and creativity by allowing employees to explore new ideas and approaches. Trust their expertise and provide guidance when needed.

8. Career Growth and Advancement

Support your employees’ career growth and advancement within the organization. Provide opportunities for skill development, such as stretch assignments or cross-functional projects. Offer mentorship programs or coaching to help employees navigate their career paths. Create a clear path for advancement and communicate the potential growth opportunities available to them.

9. Team Building and Social Activities

Organize team-building activities and social events to foster strong relationships among your employees. This can include off-site retreats, team lunches, or recreational activities. Encourage team bonding and camaraderie to enhance collaboration and create a positive work culture.

10. Continuous Improvement

Establish a culture of continuous feedback and improvement. Encourage regular check-ins between managers and employees to discuss progress, challenges, and goals. Solicit feedback from employees on processes, policies, and workplace initiatives. Actively listen to their suggestions and make necessary improvements to enhance the work environment.

Employee management meeting

Takeaway

Effective employee management and engagement are critical for small businesses to thrive. By prioritizing clear communication, providing training and development opportunities, recognizing and rewarding employee contributions, promoting work-life balance and well-being, fostering a collaborative and inclusive culture, and implementing additional strategies such as performance management, empowerment, career growth, team building, and continuous feedback, small business owners can create a positive and engaging work environment.

Investing in your employees’ success and happiness not only benefits them individually but also contributes to the overall success and growth of your small business.

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Growing a Business

Secure your startup’s future by watching the big corporations

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Welcome to Startups Weekly. Sign up here to get it in your inbox every Saturday morning. Starting next week, it moves to Fridays at 12 pm PT.

As a startup founder, wouldn’t it be awesome if you could predict the future a little bit more than you currently do? It turns out you can: By paying close attention to what the behemoths in your space are doing. Last year’s AWS Re:Invent set the direction for a lot of what Amazon is doing this year — including where it invests. Re:Invent 2023 is coming up soon.

Google I/O revealed that Google is investing heavily in computational photography, large language models and all things AI. As a startup, you can use these data points and draw a line into the future: Can you align yourself with the big-picture trends? Are you missing anything?

This week, at Apple’s worldwide developer conference WWDC, the company took the wraps off its AR/VR headset. Priced at $3,500 it won’t be a commercial success, but as a startup, you’d be very silly not to pay attention: It is a complete game-changer for startups.

Startup valuations are taking a pounding

After a frothy few years of don’t-call-it-a-bubble, it seems like the inevitable market correction is here. We’ve seen wave after wave of tech layoffs, and it seems like investors are starting to take a more realistic view of their investments, starting to mark them down.

Marking down an investment doesn’t necessarily mean drama; it refers to the common process of adjusting the value of an investment asset to reflect its current market value. In the case of VC, that often happens if the valuation turned out to be a bit on the optimistic side. Investors will typically mark down investments to avoid overstating their portfolio’s worth. In a nutshell, it’s best practice to acknowledge potential losses before they are realized. That’s what is happening now — and perhaps should have been happening for a while, as Rebecca argued late last year, when she noticed that a bunch of startups had quietly marked down their own valuations.

Jeremy Abelson and Jacob Sonnenberg, both at Irving Investors, argue that if you haven’t yet, you probably won’t grow into your 2023 investment valuation.

Image Credits: Bryce Durbin/TechCrunch

Just in the past few weeks week, we had another handful of examples of this:

Life is a highway

The EV space is exploding (sometimes literally) at the moment, and there seems to be a huge amount of stuff in motion in the world of transportation.

Mercedes just got permission from the state of California to start selling a car that can self-drive without having to hold the wheel or look at the road. No doubt this’ll set Elon Musk’s little temperature gauge to “furious” as the company’s cars do attract a federal tax break but come up short on the self-driving front in its native California.

Price is often brought up as a major hurdle for EVs, but Volvo snuck out a small SUV that can cruise along for 275 miles and has a sub-$35,000 price tag. That still isn’t pocket change, but it’s a lot cheaper than a lot of the EVs on the road. Meanwhile, Fiat showed off a city vehicle it’s working on that made both Harri and myself squee with delight.

Safety is another theme across TechCrunch’s transportation coverage: Smarter cars should, in theory, mean safer roads. In practice, Waymo had to explain why one of its autonomous Jaguars ran down a dog in San Francisco last month, and Transportation’s National Highway Traffic Safety Administration (NHTSA) recently proposed a rule that means all new cars and trucks would need to have emergency systems that “would have to be capable of stopping and avoiding contact with a vehicle at speeds of up to 62 miles per hour.”

Remember what we said about legislation driving innovation and opportunities for startup? That proposed NHTSA rule falls into that category. Thought experiment: Could your company tap into that shift somehow?

Image Credits: Bryce Durbin/TechCrunch

Apple sets the pace

While Apple isn’t really a startup, it is the world’s first $3 trillion market cap company, so in a week where our servers have been melting from all of the exciting news that came out of the WWDC keynote, I wanted to highlight some of the things that are most interesting to startups and startup founders.

One thing worth paying attention to is the Apple Design Awards, which often foreshadow large trends in design and user experience best practices — along with what the Cupertino-based software giant celebrates at the moment.

Another trend worth paying attention to from Apple is its focus on health and safety: It released a check-In feature to ensure people get home safe, a nudity filter to shield you from unsolicited real-life aubergine emoji and mental health mood tracking. All of that is specific to this WWDC, but it continues a trend: Fall detection, car crash detection, ECG to detect heart events, and lots of other health and safety indicators. It has made it easier to find and disable AirTags that might be used for stalking, and a Safety Check and lockdown mode, which takes your iPhone off the radar to get away from an abusive partner (more from our security team here).

As a startup, all of the above should give you pause for thought: There are big trends at play here that Apple clearly wants to continue to invest in. Apple has gone heavy into the privacy of your data, and leaning into security, safety, mental and physical health and more. Build something truly innovative in these spaces, and you have the world’s most valuable company validating that these are problems worth solving.

Image Credits: Apple

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