In the course of many conversations (1,000+) over the past eight years about the potential Iran bears and how to reap it in the most efficient way, many people have asked us if there are some key points that are most important when thinking about if and how to enter the Iranian market.
Hossein and I took that question to heart, and after several discussions we came up with 10 key points – some of them are not necessarily Iran specific, but rather a general market entry approach, whilst others are:
- Prepare – before you can decide on anything, you should understand the market you are thinking about doing business in. For that you can travel to the country to see and feel the current situation, and you should analyze the areas that are of interest to you and your business venture.
- Define the scope (the what) – make clear within your organization what it is that you are looking to do in terms of market expansion strategy, so that there is a clear internal situation. We have seen that this often tends to be diluted as other departments and key stakeholders add to `the what` along the way and this creates certain challenges. Having strong internal support is important for any market entry strategy.
- Define the objectives (the why) – this is something that distinguishes a professional approach from a half-hearted one in our opinion. Clearly, every company entering a new market wants to ultimately increase sales; however, if that is the sole objective, it is not a sustainable approach in highly competitive markets. A sustainable market entry strategy cannot just be about increasing sales, but should also encompass differentiation from the competition and a sustainable medium- to long-term approach. Quick wins are not realistic, especially in Iran (please refer to the related article by our Managing and Founding Partner Hossein Nabavi: http://wirtschaftsblatt.at/home/nachrichten/europa/4782781/IranGeschaeft_Schnelles-Geld-gibt-es-nicht?from=suche.intern.portal).
- Prepare an action plan (the how) – once you know why you are entering a new market, you can also start planning how to do it. A thorough action plan will entail the operational aspects that need to be taken into consideration, and in the best case should also define KPI’s. Be smart, but also flexible!
- Localize (the where) – this is a very important point for the Iranian market. Over the years we have often seen companies that try to copy and paste their business model into a foreign market. This does not work in a market that has been isolated over decades and lives under its own rules. Furthermore, consumption patterns and taste are very different. This might sound very obvious, nonetheless it is something that even large multinationals tent to forget and neglect. Deep market insight and cultural understanding is required, that in our opinion no foreigner can ultimately understand.
- Pick the right team / partners (the who) – it will be an integral part of your success in a new market that you do it along the right people. Take some time to find the right people, and do not save costs here (if you chose the wrong people / partner it will be much more costly in the long run and might even endanger your business venture altogether). You need trusted people, as you will be operating in a far away market with a very different culture. Eyes and ears which you can rely on in the market are the key (please refer to the related blog post by our Managing and Founding Partner Marlon Jünemann: http://www.ilia-corporation.com/strategic-cross-border-partnerships/).
- Go through with implementation all the way – be ware that most market entries turn out to be marathons rather than sprints. Once you have analytically set your mind to something, go through with it all the way in the implementation phase too. The longer breath will persevere, but be aware that this will require substantial resources in terms of time and money – plan that in and define a clear exit strategy trigger.
- Carefully monitor progress – especially in Iran constant monitoring is of dire importance. You need to have a system in place that is capable of screening the progress, attached to your objectives. In case there is deviation, you can react soon enough. We have often seen that companies stay very passive in that regard, especially when working together with locals (when it is most important). Constant communication is a very important issue.
- Be flexible and pragmatic – your general direction has been set, however, in a dynamic market like Iran you will need to adjust. For that you need to keep your eyes open, and grab opportunities as they arise. In our opinion this is one of the key challenges for foreign companies that are used to operate in saturated, regulated, and predictable markets, in which long-term planning is possible. In Iran things can change any moment, which can be seen as a threat, but also as an immense opportunity for aware and opportunistic entrepreneurs. This is why you need smart eyes and ears on the ground, something you cannot manage from far away in our opinion.
- Be patient and persevere – in Iran things move slower; get used to it rather than trying to fight it. The opportunities are vast and the market is very dynamic, but the market and cultural infrastructure is very different to the western world. Many companies have failed in markets like Iran and China as they lose their patience. Be the last person standing and you will succeed!
Surely these 10 points are not ultimate wisdom and the answer to everything; nonetheless they are a good guide and should trigger certain reflection.
We would be grateful for you to share your input and experiences!
ILIA Corporation Managing and Founding Partners S. Hossein Nabavi and Marlon D. Jünemann