Russian Windows Manufacturer: The European Window of Opportunity
Client Background
A Russian windows manufacturing company had grown exponentially in its domestic marketplace between the years of 2010 to 2015. The CEO had built the business from scratch and in 2015 it had more than 2,000 employees, working across 5 sites throughout the country. They were winning large contracts, both in the commercial and public sector and business was going well. Their operating margin was good for the sector they were in and due to the scale of the contracts being won, their profitability was exceptionally good. In theory, the business could have continued as it was, focusing on the domestic marketplace. However, the CEO wanted to take advantage of the opportunities that existed in overseas markets. He had previously sought guidance on this but had been told that establishing a manufacturing site in different countries across Europe was the way forward. This would have required a considerable capital outlay on his part and he was not willing to take this risk. Our brief was to identify the best approach to Market Entry into European markets based on the company’s budget and appetite for risk.
Our Approach
Having considered the client’s requirements we analysed the clients’ current operations in Russia. The manufacturing process was pretty slick, with relatively minimal waste. It was therefore not necessary to implement modifications to this, although in theory cost reductions could be introduced. This was something that we would later do once orders had increased. Our advice was to capitalise on the relatively low production costs that they were taking advantage of in the Russian marketplace and initially find distributors or local agents in target markets. After conducting initial market research, we identified Germany as being the main market where opportunities existed. This was not only because of the relatively stable political relations that existed between the countries but also because of the transport links that were already in place. However, in order to see whether this was the right market for the client to enter and if so enter it, we conducted a 6 Stage Market Entry approach. This included:
Step 1 Needs Analysis: Determining which country was the best to sell the client’s products into
Step 2 Understanding the Local Market: Gaining local knowledge and building a network
Step 3 Engage a Local Team: Making sure the in-country delivery team was in place
Step 4 Strategic Planning: Developing a localised strategy for market entry
Step 5 Distribution Network: Sourcing and setting up contracts with distributors
Step 6 Managing the Sales Pipeline: Ensuring the orders were being placed
Step 7 Logistics & Payment: Making sure that the orders were being fulfilled and payment received
Results
The company started taking commercial and public-sector orders from Germany. This increased its profitability by more than 120% year on year over the next 2 years. Once larger orders started coming
