Secrets of Mini-Multinationals

  • There is no substitute for previous experience in new markets. Build management teams and boards with global experience.

  • Maintain intense sensitivity to local markets by, for example, promoting local nationals and making them responsible for more decisions.

  • Resist the impulse to compete with larger rivals on their terms. Instead of mimicking their bureaucracy, exploit your agility and flatt er structure.

Como la hormiga: pequeño y potenteTema del mes de la web de CEDE. Escribe William J. Holstein en Chief–Think a company needs to be big to play on the world stage? Think again. Plenty of companies in the $10 million to $1 billion range are emerging as full-fledged international players by finding ways to move faster than their bigger competitors. Just ask Dawne S. Hickton, CEO of RTI International Metals, a $431 million titanium products company based in Pittsburgh, who recounts what happened when an explosion ripped through BP’s offshore oil platform in the Gulf of Mexico, resulting in a huge spill. The head of her energy unit in Texas called her directly and she authorized the immediate dispatch of a team of engineers. “When that crisis hit and everyone was watching CNN, we had 40 engineers on the platform out there working very closely with BP and others to develop an alternative solution,” Hickton says. “We weren’t this giant company that has to get every “I” dotted in a contract. A lot of their very large suppliers didn’t have the flexibility to stop everything they were doing, get all the approvals in place and get moving.”

The moral of the story is that you don’t have to be a giant to go global—that, in fact, smaller companies can use their size as an edge in overseas markets. Although it’s generally known that small to mid-size companies can be successful as exporters of their products, what has largely escaped attention is that a subset of these companies are defying the conventional wisdom that one must be a multi-billion-dollar-a-year multinational to play in such tricky markets as China and India. These “mini-multinationals” do more than just export their products to a single customer or a single distributor offshore. They operate factories, sales offices and laboratories in multiple countries on multiple continents. (See “A Sampling of Mini-Multinationals”) They do so by leveraging their ability to be more agile, more focused on a core competency and more entrepreneurial than their larger peers. Here are some of the global strategies they employ:

  • Focus on serving a relatively narrow technological niche. While mini-multinationals as a whole play across the technological spectrum, each focuses on competing in a core area of expertise. On the larger end of the size range, privately held Revstone group, for example, supplies large automakers like GM, Ford, Toyota, Volkswagen and Hyundai with castings, forgings, tools and precision machining. GrafTech International, based near Cleveland, manufacturers in four countries and sells its graphite electrodes to steel producers in 65.

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