Achieving International Success

The next most preferred model, a joint venture, was the choice of slightly less than 40%. “Sometimes this is required by local regulation,” Jurczynski said, “but theres a higher risk.”

Acquiring a company as a way of entering a market came in far behind, according to the research. “It was not a highly regarded approach among the interviewed companies,” Jurczynski said.

In the early years of a start-up, companies employ a number of different measures, Jurczynski said, but breakeven is the most frequently used. In fact, until you break even, the measure is break even, he said, and the target is generally 3-5 years.

After this, growth of volume and penetration of targeted distribution channels are among the measures employed, as well as ROE.

In any case, he said, “sales is always the necessary ingredient to success.”

Executives interviewed also related that their operations face long-standing challenges that demand continued attention, even after the start-up phase. These include controlling infrastructure costs and keeping the processes simple; constantly reacting to new regulatory demands and market cultures (“understanding what you can and cant do”); and, maintaining brand value as new entrants emerge and pre-existing companies react to entry.

When executives were asked about early-stage areas of success, they felt, according to Jurczynski, that “getting the right product was the least worrisome issue.” Creating brand and value were also deemed relatively easy.

More challenging areas were getting good people and finding the right distribution. Most challenging of all, he said, was achieving persistency through post-sales support.

Finally, several executives, in looking back, said they would change their decisions in key areas. “All said they didnt know enough about the market beforehand,” Jurczynski said. Therefore, in retrospect, they would have delayed start-up and waited for the market to mature.

Others said they would have: had more detail in place for the business model; accelerated branding and market outreach from the launch date; and, tested theories because in some cases anticipating competitive pricing was a costly tactic. Additionally, attempts to save money by using a start-up call center actually resulted in higher costs from untrained call center representative errors, which jeopardized service quality, some said.

Reproduced from National Underwriter Edition, May 7, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.