As you look at your corporate Strategic Plan, do you see Partnerships in Business in your future? It’s time to wake up and accept that the game has changed and to survive you need to step yours up! Waiting and hoping that “things will get back to normal is a bad plan…hopefully it isn’t yours!
Many top CEOs I work with are starting to realize that they need to forget about waiting for normal to return – this is the new normal. So what does that mean? It means coming to terms with a national unemployment rate that is currently at 8.7% and that corporate debt is at least three times what it was in 2005. It means accepting the fact that the financial institutions are less willing to extend credit, therefore corporate expansion means you have to have “deep pockets”, or does it?
The AEC Industry Today
Let’s look at the AEC industry facts. Owners and developers are struggling to find financing to move their projects forward. If they are able to find the financing, it is often limited or not enough to complete the job. To make matters even worse, because funding for both public and private projects is restricting available projects going out for bid, the solicitation market is saturated with qualified firms completing for the same projects, forcing winning firms to under-bid to keep their doors open. This scenario opens up the owner/developer to the risks that accompany low bid projects everywhere, low quality products and service, unlimited “change orders” and corner cutting in a concerted effort to save pennies. It’s a “no win” situation all around, sounds like a bad plan to me!
What do we do now?
If we accept things have changed, then what do we do? How do we adjust our strategic plan to account for today’s economy? Two options I propose are that we need to
1) expand beyond our national borders
2) accept we cannot do it alone!
We live in a global economy and yet many companies aren’t participating. Do you think they needed the AEC Industry in the 2008 Olympics in China? Can you see that there must have been many opportunities – many strategic partnerships formed to have something of this magnitude be accomplished on time? Can you imagine the logistics? No way one or two players, doesn’t matter how big they were, accomplished this.
But how can I play on the world stage?
I believe the answer is in forming strategic partnerships with international companies. Partnerships open the door to cost sharing, reducing the initial investment associated with global expansion. The primary deterrents to expanding internationally are:
1) fear of operating in a new culture and business environment you aren’t familiar with
2) concerns for “hidden” costs due to item #1
This is where strategic partnerships comes into play. Working with a partner local to the area you are seeking to do business, is essential in helping you break into a new market while simultaneously eliminating the unknown. You now have a “partner” looking out for you because as they say “you can’t sink the officers quarters” meaning your fates are tied together – for success to happen your interests and their interests are one in the same. Having a “local” partner also means less business travel costs, they take care of the day to day business development, you come in when your expertise in a certain area is needed.
Local knowledge is necessary to efficiently and effectively transact and maneuver within the social and political landscapes of a foreign country. A local partner can alleviate the unknown on four different fronts
- regulatory
- technological
- contractual
- cultural
At the same time US firms bring well-needed competitive advantage to foreign firms in the form of high-end technology, lessons learned, proven standards and front-end planning and programming.
In conclusion, if you are thinking about a move into the global market it is imperative to do your homework. Make sure that you understand what the requirements are before moving into that market. Most international markets will not allow firms to participate without partnering with local firms.
So how do you choose what firms to partner with?
Well that is the subject of another blog…but I can tell you that I am currently writing this blog while in Rio di Janiero. For the last week I have been meeting with FIFA and the Olympic Planning Committee to find new opportunities for US firms for the upcoming 2014 World Cup and 2016 Olympics in Brazil. These meetings are a continuation of ongoing efforts that have taken almost 2 years to develop. With each new proposal delivered ( four to date), new opportunities are unveiled as Brazilian entrepreneurs catch wind of the unique value US firms can bring to the table.
DAVNA specializes in working internationally to open new markets for local AEC, Technology and Transportation service firms. We participate with international markets to bring the knowledge needed to help you expand globally. We are currently working with several international and national firms in the pursuit of work for the 2014 World Cup and 2016 Olympics in Brazil. If you would like more information on how you can participate in the opportunities available in Brazil and South America, email me atdolivo@davna.com.
DAVNA Enterprises, LLC is a marketing solutions firm dedicated to the Architectural, Engineering and Construction industry to improve the effectiveness of their marketing initiatives and keeping marketing professionals apprised of new and upcoming marketing tools and resources.
