Mini Case Study – How to establish a successful business that works across multiple borders (20…
Mini Case Study –
How to establish a successful business that works across multiple borders (20 marks) Two questions at the end of the case study have to be addressed. The year 2021 marks when VAVAVOOM – supplier of promotional and award solutions to some of Australia’s leading brands – will celebrate its 18th anniversary. Matt Cave, CEO, is proud to have reached this point. Everything has finally come together for his business. But it’s taken a lot of effort. Managing 22 staff in Australia and 10 in China does come with many challenges. To explain, a big part of VAVAVOOM’s business is in manufacturing. And with 90 per cent of the world’s manufacturing based in China or nearby Asian countries, working with China is just part of Matt’s day. Do your research To initiate overseas operations, Matt suggests: Researching to find the right suppliers and trading companies that “best fit” your requirements. Initially, hiring an agent who can help you may be a good initial step. Don’t just focus on cost, but also look for value, quality and reliability. Flying overseas to assess the situation. Choose a supplier in your source country who will be your representative for at least a year while you familiarise yourself with that country’s system and local processes. Once familiar, learn about the country’s business structures to find out what your best options are. For example, after a few years of doing business in China, Matt realised it would be more beneficial to set up a wholly owned foreign enterprise (WOFE) based in China. This means that VAVAVOOM can now transact as a Chinese business, enabling B2B processes like local currency billing, with less restrictions. Know your supply chain One of the key reasons clients choose VAVAVOOM is because of its commitment to ethical and sustainable work conditions in China. To keep on top of this, Matt knows VAVAVOOM’s operations inside out, including where items are sourced from and how they are made. Further, giant strides are being made internationally on the CSR front, and it’s important to keep abreast of how compliance is being managed globally and how it can be applied locally. Knowing the capabilities of your supply chain gives you confidence to tell a client about your practices. Plus, being heavily involved provides great insight into how processes can be improved to better meet client expectations. Manage cultural expectations and standards When creating promotional products for big companies, it is especially important to deliver only the highest quality. The problem is that in some countries, the definition of “the highest quality” isn’t always the same as in Australia’s. To combat this, Matt stands by the mantra of “Communication is Key”. He facilitates weekly team meetings and emails staff daily across offices to manage customer and operational priorities, despite the time difference. While the natural tendency is to do most of the “talking” in communication, Matt cannot stress enough the importance of a healthy two-way dialogue. It is in the listening that the learning occurs and future opportunities arise. Get the right people on the bus Matt acknowledges that language and culture are major issues when conducting business across two or more countries. If possible, appoint a General Manager who has a good understanding of both cultures and can speak both languages. Better yet, hire someone who also has an understanding of your business. As an example, VAVAVOOM’s GM in China is a Chinese / Australian former employee, and Matt has no doubts this has been invaluable to the team’s success there. Define what success looks like and performance manage to get it With the help of his finance team, Matt developed monthly performance indicators that are consistently applied across all branches. Irrespective of location, a laser-like focus on these numbers means everyone knows what the target is and works diligently to meet the business expectation. Biannually, all GMs get together to “deep dive” on performance and tweak the plan, focusing on specific “pain points”.
Question 1. Identify the relevant political, cultural, economic, ethical factors and market entry method highlighted in this case study.
Question 2. Critically analyse how VAVAVOOM addressed each of the above issues.