Going Global: The Challenges of Selling in Multiple Markets
Foreignexchange Translations, Inc.ter>ContentsWhy bother with foreign markets?
State the Mission
Provide Adequate Resources
Where to next?Foreignexchange Translations, Inc.ter>
As the U.S. market for medical devices matures and grows more competitive each year, many device manufacturers are looking overseas for customer and revenue growth.
Fueled by booming overseas economies and relaxed export regulations, exports have been growing by around 10% per year throughout the 1990s. The Health Industry Manufacturers Association projects 1999 exports to reach $16.2 billion. As a result, today you'll find all types of medical device companies—large and small, across all categories—participating in the export boom.
That means all is well on the export front, right? Well, not quite. While the "global economy" may have arrived, there are many bumps in the road, and horror stories are commonplace:
• International regulatory submissions are time-consuming and compliance officers are struggling to keep up with ever-changing international standards.
• Cost overruns are rampant, and international profit margins often fall short of projections.
• Some markets are smaller than initially projected (sometimes small enough to fit all products sold there onto one conference room table).
• Internal organizational strife has created an "Us versus Them" environment.
For Brett White, Senior Packaging Engineer with Sulzer Carbomedics in Austin, TX, the number of challenges and frustrations is great. He cites as examples: "CE Mark compliance, ISO requirements, country-specific language requirements, universal graphic symbols for foreign text, quality translation services, increased lead-times due to translation requirements, and language-specific font/technology not supported by U.S. computers and operating systems."Foreignexchange Translations, Inc.ter>Back to ContentsForeignexchange Translations, Inc.ter>
Why bother with foreign markets?
U.S. medical device manufacturers simply cannot afford to ignore global markets if they wish to maintain their industry leadership. Despite the problems encountered, international sales contribute substantial earnings to the industry's bottom line.
Nonetheless, whether you are an established device manufacturer or a small firm just getting started, you will find yourself facing fundamental marketing, regulatory, and packaging challenges as you expand abroad.
This series of articles will identify some of these challenges and will discuss ways to avoid them or overcome them. Although there are no easy solutions and success often hinges on the combined talents and efforts of the departments affected, by following these guidelines you will be better prepared to enter foreign markets.Foreignexchange Translations, Inc.ter>Back to ContentsForeignexchange Translations, Inc.ter>
State the Mission
Before diving in, it's important to answer the following questions: Why is our company going global? What are we looking to achieve? How does "international" fit into the company's strategy?
Too many companies enter the international marketplace without definite answers to these questions. The first move in avoiding missteps is to perform a thorough situation analysis. Senior management should typically consider the following areas:
• Market analysis. How many markets are under consideration? What products are currently selling in the markets under consideration as well as domestically? What are competitors doing? Do the selected markets support price points that allow for profit? What is the size of the market now and in the future?
• Organizational capabilities. Many companies lose sight of the demands that an international sales push will place on the organization. Does the required breadth and depth of skills exist? What functions or departments need to be shored up with additional staff? Will internal politics and turf wars sabotage the venture? A company may simply be too small (or underfunded) to sustain this effort.
• Return on investment. Some companies are getting swept up in the mad dash to enter overseas markets without looking at the underlying financials. What capital expenditures are required? What will the impact be on company overhead? What is the projected return on investment? What risk factors exist? What other investment needs and opportunities does the company have?
• Timing. The cost of rushing into a market too early (i.e., no market exists yet) must be balanced with the risk of entering too late (i.e., competitors are already established).
• Business objectives. Ultimately, management needs to evaluate how this effort matches up with the companies overall strategy and mission.
There are no "right" answers to these questions. The key is in thoroughly analyzing these issues and their implications before enacting a global markets strategy. This analysis should result in clearly defined milestones, goals, and objectives. The clearer the mission the easier the implementation—and the greater the odds of success.Foreignexchange Translations, Inc.ter>Back to ContentsForeignexchange Translations, Inc.ter>
Cross-Organizational Support
The situation analysis should result in the appointment of one person to spearhead the international effort. While different operations inside the company will need to cooperate, one person must have the responsibility and authority to carry out the mission.
Going global affects nearly all departments. While the international team leader may quickly come up with a solution and implementation strategy, that person's most important contribution must be to solicit the involvement of the affected parties. The graphic below depicts the responsibilities of the various parties.Foreignexchange Translations, Inc.ter>
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Provide Adequate Resources
When entering international markets, companies must support this effort with sufficient financial and human resources.
Human Resources
Exporting will make new demands on many different departments, including: regulatory affairs, technical publications, packaging, distribution, marketing, sales, finance, customer support, and so on. The department managers need to be involved in the planning stages and need to have input into the allocation of their resources.
Many of the functions affected by going international can be outsourced to third parties or suppliers. However, those relationships must still be managed and thus require internal resources as well.
When considering various options for resource allocation, in-country affiliates are an attractive option. However, companies often neglect to take into consideration the capabilities of affiliate offices:
• Nature of office. What function does the affiliate play? Is it a sales force or an inventory warehouse? Can there be sufficient staffing to take on additional responsibility?
• Processes. Are local staff trained and up-to-date on company policies and procedures? Are the relevant quality systems in place? Does the team include a quality or regulatory affairs manager?
• Translation management. While many medical device companies prefer to control translation efforts centrally, it is possible to have affiliates assume responsibility for this function and to have them coordinate translation through in-country vendors. Alternatively, many affiliates act as reviewers of the translation vendor's work.
• Technology. Is the necessary infrastructure in place? Often, companies find that affiliate offices use hardware and software and systems that are different from headquarters and from other affiliates.
Also, while international compliance can be handled without the assistance of in-country affiliates, this approach is not recommended. Sulzer Carbomedics' White recommends that manufacturers take advantage of this resource. "In-country affiliates can offer great assistance in interpreting existing packaging and labeling guidelines," he says. "More importantly, they can keep medical device manufacturers informed of new laws that may impact the distribution of their product in foreign countries."
As these questions arise and are answered, the original solution will become more complex. By involving affected sites and departments in the planning, companies will be able to reduce internal politics and keep in-fighting to a minimum.
Financial Resources
Dollars must be invested before marks or yen can be earned. Therefore, a detailed budget must be established early on. Some costs are easy to anticipate. For instance, Daphne Walmer, manager of technical communications at Minneapolis-based Medtronic Inc., points out that "the cost of translation can equal the cost of developing the English for each target language."
However, not all costs are obvious. According to Walmer, some of the potentially unforeseen costs include:
• additional travel, not just for executives and sales people but also for people in other organizations who need to make things work;
• costs of gaining regulatory approvals through multiple organizations, which have slightly different and occasionally contradictory requirements from the FDA;
• the need to localize marketing communications as well as translating them (even though one might be able to get away with nearly identical content for technical documentation, this is unlikely for promotional materials, because what sells differs across the world);
• the need or desirability to translate and localize at least some employee communications, depending upon the work force;
• translation and localization of the company's Internet site;
• the need to rethink the way the company develops products and materials to be more international, especially software and multimedia applications (i.e., designing them to make translation and localization easier, or, in some cases, possible at all);
• the need to educate people how to work with others from different cultures. If companies don't do it up front, they may pay in terms of missed schedules, misunderstandings, frustration, and seemingly unexplainable failures.
There are also a number of hidden costs in going global. One of the most overlooked costs is currency risk. The graphic below shows the fluctuations of four major currencies versus the U.S. Dollar (source: Federal Reserve Bank of Chicago).Foreignexchange Translations, Inc.ter>
Currency fluctuations directly impact a company's earnings from overseas sales. Since most international sales are made in local currencies, the resulting U.S. Dollar revenues will rise and fall with the exchange rate. If stable currencies fluctuate this wildly think about how unpredictable the revenue stream from smaller markets will be!Foreignexchange Translations, Inc.ter>Back to ContentsForeignexchange Translations, Inc.ter>
Where to next?
There are many hazards on the road to marketing medical devices overseas. However, with the proper planning and dedication of resources, it is possible to circumvent these challenges and to steer a path to profitable growth in international markets. U.S. medical device manufacturers cannot afford to ignore international markets if they wish to maintain—let alone grow—their market position.
The next article in this series will look further downstream. Challenges in the areas of international regulatory affairs, translation management as well as process engineering will be examined.Foreignexchange Translations, Inc.ter>Back to ContentsForeignexchange Translations, Inc.ter>
Andres Heuberger is president of <%=company%>, One Richmond Square, Providence, RI 02906. Tel: (401) 454-0787; Fax: (401) 454-0789; E-mail: andresh@fxtrans.com; Web site: http://www.medicaltranslation.com.