Smallness is not an obstacle

Individual companies have many options on how to overcome the problem of “small size” or how to turn obstacles in foreign markets into challenges and opportunities.

Regarding the entry of smaller companies into foreign markets, we often mention either internal barriers of companies (especially lack of financial resources, technological obsolescence of production equipment and products, inexperience of staff for international operations, etc.) or barriers in the business environment (especially payment indiscipline, inadequate financial aid instruments, etc.).

While a company can influence internal barriers with appropriate development strategies and business models, it can be much more difficult to influence barriers in the business environment. However, we have many cases where even smaller companies – despite their small size and initial inexperience – have achieved remarkable success in foreign markets. Individual companies have many different options on how to overcome the problem of “small size” or how to turn obstacles in foreign markets into challenges and opportunities. Here are the two most important modern approaches that work in combination:

1. A change in mental concepts and a changed business culture, which is in the domain of individuals within the company, of course first in the domain of management and owners, and immediately afterwards also of all other employees. This means that we believe in our abilities, but at the same time we are aware that we cannot do everything ourselves, nor is it necessary to do everything ourselves. We are starting to collaborate and connect inside and outside the company. We begin to be aware of the importance of each individual, to accept diversity or otherness, we begin to trust each other, to open up to each other and to know how to honestly share what is created with others. We are beginning to believe in a collective power. Of course, this is not meant only as the internal collective strength of an individual company, but necessarily in connection with the external world, which we have been able to incorporate into our development scenario and motivate it to contribute to the common goal of the collective.
2. Development of partnership strategies and introduction of innovative collaborative business models, which is actually a logical consequence of the changed mindset and business culture. Partnership strategy is a dynamic category, i.e. in constant movement or change according to the current situation in the company. When developing a partnership strategy, we can start either from the vision and strategy of the company or from the current troubles in the company. In both cases, the partnership strategy and the appropriate collaborative business model bring us a solution to realize our strategy or solve our problem, e.g. lack of funds, insufficient capacity, lack of foreign market knowledge, etc. But it also brings much more: great collective power and an advantage over the competition, which has not yet established such models. Collective power is multifaceted, of course, if we know how to use it.

Some examples:

• companies reduce costs by reducing purchasing costs through group or collective purchasing models;
• it is not necessary for companies to increase their production capacities if they do not have the resources to do so or if it is only an occasional increase in production volume; they can develop so-called “extended production capacities” with the help of compatible production partners who are used when necessary;
• due to lack of financial resources and/or knowledge, companies can create a partnership with  a company specializing in marketing and sales, which takes over all marketing and sales activities;
• companies work with external innovators, engineers and existing and potential customers in order to continuously develop new products and services;
• companies work with a “creative industry” that brings design surpluses;
• companies work with developers of information and communication solutions which enable to cooperate and make business across all borders;
• companies use the collective power of social networks to increase the visibility and sales of products and services;
• and more.

When preparing partnership strategies and collaborative models, it should be borne in mind that each life cycle of a company, product or service and project, each group of products and services or sector of an individual company, each target group or each target foreign market requires consideration of possible partnerships which can replace missing or poorly represented or even poor quality elements or functions within the company. At the same time, it is necessary to be aware that among the competing companies there is a fight for “talents”, because only talents bring the competitiveness to the company. New business models will need to include so-called “the principle of an open book“, which means transparency, and at the same time to appropriately reward all those who will contribute to the business results. With the transparency or the principle of an open book, you will gain the trust, loyalty and motivation of employees and partners, either internal or external, otherwise they will be attracted by those who already know how to introduce such models and transfer them into everyday business practice.

It is clear from practice that the vast majority of companies do not have planned partnership strategies, but they do have individual partnerships that have never been systematically developed and managed. I estimate that in this area of business there is an extremely large gap between successful growing companies and others, and that in this area, which is also becoming an extremely important competitive factor in all countries, we could make the greatest contribution to increasing the competitiveness of companies in domestic and foreign markets. Small companies in particular should take these new trends and approaches very seriously, take them as a challenge and introduce them into everyday practice. It is in these new strategies and models that smaller companies have many advantages over large ones. In a larger company, it is much more difficult to change the business culture and mental concepts, or it takes much more time for such changes than in a smaller company. And money doesn’t really play the most important role in these new models anymore. The most important role in these new concepts is played by people and the interrelationships between them.

In my opinion, smaller companies will have to decide on their primary role, namely whether to focus on:

• innovations;
• production;
• sale; or
• organizational and technological connectivity and collaborative approaches.

This means that a company that cannot, does not know or does not want to develop collaborative multidisciplinary, multisectoral models will become just a manufacturing company, which will of course have to produce top quality products for known buyers, and cheaply, efficiently and quickly, while others will be innovative, successful in sales and/or in building collaborative business ecosystems. You can estimate for yourself where the minimum or maximum added value will be.

Note: The article was originally written in Slovenian language and published in April 2013 in the journal “Go International Slovenia” of the Slovenian Chamber of Commerce and Industry. You can view it at the link “Majhnost ni ovira / Smallness is not an obstacle”.