Importing ideas

Alvaro Sancho. Professor. Instituto de Empresa

23 December 2003

Importing successful ideas from other countries is a classic formula for entrepreneurs. How often on holidays or business trips have we asked ourselves, “Why hasn’t this been adopted in Spain? It would surely work.”

This was how it happened with Leopoldo Fernández Pujals, the founder of Telepizza, when he decided to start his chain of home-delivery outlets. The formula was widely employed in New York, as he observed while working in the sales division of a multinational there. All he did was adapt the product to local tastes and run the business in a similar way.

Globalization has made customer tastes and preferences increasingly similar, and ideas that triumph in one market are likely to succeed in others, simply after making the pertinent adjustments to the new environment.

However, a globalized market does not mean all markets are the same – far from it. McDonalds, for example, failed in its first foray into Spain. Two fundamental problems were to blame. The Mediterranean diet is the richest and most varied in the world; and the company’s Iberian establishments did not serve beer. This last point was a major stumbling block for the firm. Spaniards wanted beer with their meals so strongly that the fast-food chain was forced to close its first outlets, carry out an in-depth market study and, years later, open restaurants that have now proved successful. Today McDonalds offers different products in each country, freely adapting to the preferences of each.

The first thing an entrepreneur has to do when it comes to importing ideas is draw up a comprehensive business plan, which clearly identifies such aspects as:
1. What are the keys to the idea’s success in its market of origin and those where it has been similarly implemented?
2. Are those keys exportable?
3. Can I do it by myself or will I need the support of the original company? Companies whose competitive edge is based on specific technology – dry cleaners, for example – are difficult to replicate if you do not have that technology. In such cases, it’s best to seek an alliance.
4. What is the legal situation? Sometimes legal situations facilitate development of businesses that would not be possible in Spain, or vice-versa. Casinos, for example, can get licenses in Spain, but are prohibited in Mexico. Make sure you face no legal impediments to setting up the business.
5. Study the new market environment – the customers, suppliers, distribution, etc.
6. If possible, it is worth testing the product in the new marketplace. This will enable you to identify whether it is necessary to make changes to satisfy new tastes, or whether the product or service will sell as is.
7. Take the time factor into account. Some other entrepreneur could jump in and seize the idea first. Do not rest on your laurels.

The idea is to copy, but adapt to the demands, tastes and needs of the new marketplace.

Preventing pitfalls

The most common error is taking things for granted. Since winter is cold in Madrid, nobody eats ice cream there. Why then, in January, is seven times more ice-cream consumed in New York than Madrid, though it is five times colder? Because consumers in Madrid consider ice cream a refreshment, while New Yorkers see it as a dessert. This is simply a question of product positioning.

Even more common is assuming that if it works there, I can do it here. Things are not that straightforward. It’s worth devoting some time to checking whether it is necessary to make some conversions to get it to fit the bill locally. A sound business plan is vital.

Importing ideas is a classic formula. It is easy to find an idea, that’s already on the street, so anyone with an entrepreneurial spirit and an observant nature can take it up. It is also highly motivating. Seeing that something already works successfully seems to reduce an entrepreneur’s aversion to risk. You count – or can count – on the support and experience of the person who originated it, thus avoiding many initial errors. And globalization is facilitating the signing of free-trade agreements between countries, thus boosting the international movement of goods and services.

For these reasons, creating a firm with imported ideas is a favorite approache among entrepreneurs. It is simply a question of being constantly on the lookout; many of tomorrow’s great ideas are already being capitalized on elsewhere.

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