Director Business Wisdom - Achieving International Growth

BUSINESS WISDOM MAKING EXCELLENCE A HABIT

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Achieving international growth

How to take your business global

The government is continuallyurging UK business to focuson international trade, withthe aim of kick-startinggrowth through exporting. The reality, however, can bequite daunting as foreignmarkets can be very different,

from their regulatory systems to the local culture. This can cause some companies to hesitate in

taking their first step to expand their businessoverseas. Factors you may need to consider inorder to build a solid business case for expansioninclude obtaining capital/funding, internationalcredibility, local market presence, export logistics,legislative compliance, and resilient operationalplans, to name but a few. And most importantly,you should look at the issue of how you’re goingto attract prospective local customers.

Our latest booklet explores some of the wayswe have helped our clients achieve internationalgrowth. From ensuring you have evaluated your risks and regulatory requirements todemonstrating you are an ethical and credibleorganisation that people want to do businesswith, standards can provide you with theframeworks and trust you need to succeed.

If you’ve missed any of our previous BusinessWisdom guides or want to benefit from ourexclusive IoD member promotions, visitwww.bsigroup.com/iod.

Howard Kerr Chief executive, BSI Group

How to expand yourbusiness overseas

Group Editor Lysanne CurrieWriter Tom NashChief Sub Editor Robert SlyArt Director Chris RoweCommercial Director Sarah ReadyAdvertising Director Jo McGrawClient Sales Manager Fiona O’MahonyHead of Commercial Relations Nicola MorrisProduction Manager Lisa RobertsonChief Operating Officer Andrew Main Wilson

Published by Director Publications Ltd for the Institute of Directors, 116 Pall Mall, London, SW1Y 5ED. Opinionsexpressed do not necessarily reflect IoD policy. The IoD accepts no responsibility for views expressed by contributors.

FOREWORD 3Overseas markets can reward well-preparedbusinesses, says BSI chief executive Howard Kerr

EXPORTS: ARE YOU READY? 4Embracing management system standards canmaximise your chances of success abroad

WORKING TOGETHER 6Understanding what foreign partners want willhelp you get more from overseas contracts

RISK AND REWARD 8How a range of BSI standards can help youminimise the dangers of trading abroad

THE CONFIDENCE GAME 10Following international standards reassurescustomers and suppliers overseas

Editorial 020 7766 8950 [email protected] 020 7766 8900 [email protected] 020 7766 8960 [email protected] of Directors 020 7839 1233 www.iod.com

3D E C E M B E R 2 0 1 2 / J A N U A R Y 2 0 1 3 D I R E C T O R

Making excellence a habit

If you are looking to expand your business, there is no better way to demonstrate

your credentials than to invest in ISO 9001. Join over 1 million organizations around

the world who currently use the standard to drive performance and quality in their business.

And 71% of BSI clients say that ISO 9001 has helped them to retain customers and

acquire new business as a result.

Working with clients across the globe, BSI is helping to deliver excellence

through a range of ISO 9001 training, toolkits and services.

To find out more about how ISO 9001 can help grow your business:

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Making excellence a habit

4 5D E C E M B E R 2 0 1 2 / J A N U A R Y 2 0 1 3 D I R E C T O R Director Business wisdom

Lord Green, minister fortrade and investment, hasjoined a growing chorus ofvoices calling for SMEs to

consider new export markets fortheir products and services. “Themarketplace has gone global andthere is no reason why smallbusinesses should not be part of it. More than 99 per cent of theUK’s 4.8 million businesses areSMEs, but only 20 per cent areexporters,” he says.

With the UK economy growingsluggishly and the pound atrelatively competitive levels, thereis powerful logic in SMEs acting onthe minister’s advice and strivingto tap into buoyant global markets.But experts counsel caution.

“Don’t just do it,” says LesleyBatchelor, director general of theInstitute of Export, citing a host ofissues to consider, from customercredit-checking and currency risksto insurance and intellectualproperty protection. “Whichevermarket you’re targeting, plancarefully, get training, do researchand seek good advice,” she says.

Maureen Sumner Smith, globalmarketing director at BSI, says that internationally recognisedstandards can strengthen a firm’scredentials. She advises: “SMEs in

the UK should be independently assessed to prove internationally they have the right controls and processes in place and when doing so, they should seek certification from an accredited international body.”

Sumner Smith highlights the management systems that can help – ISO 9001, ISO 14001 and ISO 27001, as, respectively, they demonstrate a commitment to delivering quality products or

Stralfors helps major clientscommunicate effectivelyand cost-efficiently withtheir large customer bases,both through traditionalprinting and mailing andalso using digital media.

The company operatesin the UK and six otherEuropean countries. Clientsinclude major names inbanking and financialservices, utilities, the publicsector and the gamingindustry. It has a turnoverof over £300m and employsmore than 1,000 staff.

In the UK, whereStralfors has 140 staff, thecompany operates anintegrated managementsystem based on ISO 9001. The group hasachieved certification to global managementsystem standards in thefields of environment (ISO14001), information security(ISO 27001) and health and

safety (OHSAS 18001).Stralfors has recently

achieved certification tothe business continuity

standard ISO 22301. ItsEuropean operations arealso becoming certified tointernational standards.“Our ability to demonstrate

reliability, stability, cost-savings and continualimprovement has beenunderpinned by ourmanagement systems,”says Tony Plummer, UKmanaging director.“Standards are a ticket tothe game in our industry.You can’t take part unlessyou have them.” He saysthat customers want to seesuppliers “demonstrategood process” throughaudited internationalstandards. “They want tocheck against somethingcredible to be reassured onquality and compliance.”

CASE STUDY

A passport to exportAs business conditions at home get tougher, the government is urging UK companiesto look for new export markets. BSI shows how management systems can help

of BSI clients saythat ISO 9001 hashelped them toretain customersand acquire newbusiness as a result

SECURING A TICKET TO THE GAMEStandards are vital for growing international success,according to Stralfors

“Using global standards reassures overseas customers if you’re an SME exporting for the first time”

“We can alwaysimprove. Thestandards put us incontrol – and theyshow others thatwe’re in control”

services, environmental efficiency,and information security. The newbusiness continuity managementstandard ISO 22301 is also crucial,“showing your resilience to yourcustomers, particularly if you’re acritical part of their global supplychain. Global standards reassureoverseas customers who may notknow much about you, especially if

you’re a small firm exporting forthe first time.”

71%

6

Expanding into overseasmarkets has long been achallenge for SMEs. The task is easier for large

organisations, which have greaterresources for setting up jointventures, acquiring foreign operationsor establishing their own subsidiaries.

What many SMEs need is theability to collaborate effectively withforeign partners, while protectingtheir own assets and reputation.“There has to be something in it forboth parties,” says David Hawkins,director of operations at the Institutefor Collaborative Working. That“something” might be: businessintroductions (personal referrals arevital for doing business in China),

access to technology, provision ofexpertise, or establishing a two-waystreet into each other’s marketplace.“The key is to understand what eachside wants,” he says.

The answer for many could lie inBS 11000 Collaborative BusinessRelationships, which can act as a kindof pre-nuptial agreement forbusinesses. The standard provides a framework for managingcollaborative business relationshipsfor maximum benefit to all parties. Abusiness can use it to:• Identify how relationshipmanagement can help achieve itscommercial objectives•Evaluate the benefits of enteringinto a single or multiple partnerships

•Select the right partner tocomplement its objectives•Build a joint approach based onmutual advantage•Develop added value•Develop and execute a successfulexit strategy

“BS 11000 provides the rules ofengagement, helping to overcomecultural differences when doingbusiness abroad,” says Hawkins. “Itprompts the questions both partiesshould ask of each other, rather thankeeping their cards under the table.”

He adds that the standard alsohelps to “highlight problem areas, sothey can be addressed upfront, whichmakes it easier for partners to buildtrust in each other”.

Director Business wisdom 7D E C E M B E R 2 0 1 2 / J A N U A R Y 2 0 1 3 D I R E C T O R

“The realkey is tounderstandwhat eachside wants”

CASE STUDYPROFITING FROMPARTNERSHIPS Pera builds strong relationships beyond the UK,where partners often struggle to succeedManagement consultancyPera helps businesses and governments createemployment andsustainable business growthby providing expertise andtraining, transferringknowledge and improvingthe skills of a country’sworkforce.

As well as significantprojects in the UK, it hasworked with several partnerorganisations to delivergovernment programmesoverseas, where it was notviable or good value to fly outUK-based staff and insteadit has needed strong localpartners to deliver services.

Pera was the first UKmanagement consultancy to become certified to thepartnership-workingstandard BS 11000, which isrecognised internationally as the framework forcollaborative businessrelationships.

“Having the standarddemonstrates that we’recommitted to workingcollaboratively with ourpartners to make an impact,”says Ben Wilson, Pera’s headof organisational innovation.“We’re a medium-sizedorganisation, but thestandard allows us to punchway above our weight.”

For example, workingwith the Jordanian Chamberof Industry and the JordanEnterprise DevelopmentCorporation, Pera hasprovided a blend of trainingand consultancy to helpnurture innovation across a wide range of businesses.

“Delivery partnersleverage our brand andrelationships, so ourreputation is at stake, butthis makes for more effort byall parties to make it work,”says Wilson. BS 11000, headds, provides structure anddisciplined record-keeping,making it quickly transparentif things are going wrong. “Itcreates more openness andhonesty than you’d get witha traditional contract.”

Working together: a winning formulaBusinesses can get more out of overseas work if they collaborate with partners abroad

“It creates moreopenness andhonesty than you’d get with a traditional contract”

8 Director Business wisdom

Standards help businesses of all sizes achieve andmaintain best practice andthis holds true when it

comes to managing the risks ofdoing business across borders.

As well as globally recognisedstandards in risk managementitself, there are also relevantstandards in business continuitymanagement (BCM), informationsecurity management, crisismanagement and anti-bribery.

“These standards are sometimesperceived as defensive measures,adopted mainly by large companies to help avoid disastersand reputational damage,” saysAnne Hayes, head of marketdevelopment at BSI. “In fact, usingstandards should be seen muchmore positively, because theyencourage overseas customers to do business with you. Standardsare equally applicable to SMEs – they save time and provideexpertise rather than companieshaving to acquire specialist abilities themselves.”

In the field of BCM, BSI haslaunched ISO 22301, which cangive a competitive edge to

businesses that provide criticalservices to overseas customers. The requirements of the standardare fully scalable, making it just as appropriate for SMEs as forlarger firms.

Information is critical to theoperation of most businesses, largeor small, and ISO 27001 and ISO27002 are chief among standardsdesigned to help them manage andprotect valuable information assets.Again, this gives confidence tooverseas customers and suppliers.

To combat corruption, BSI has published BS 10500 to helporganisations implement aneffective anti-bribery managementsystem. This standard takes intoaccount both the requirements ofthe UK Bribery Act as well asinternationally recognised goodpractice, so it can be used by any company in Britain orinternationally. BS 10500 enablesorganisations to operate duediligence by considering both localand national legislation.

Balancing risk and reward Businesses looking to grow internationally are potentially exposed to new dangers – but standards can help manage their risks and boost rewards

CASE STUDY

Lettergold Plasticsbenefits from beingcertified to severalimportant internationalstandards, including the key discipline ofbusiness continuitymanagement

The experience of LettergoldPlastics highlights howstandards can boost SMEstrading internationally.

Lettergold specialises ininjection moulding, contractpackaging and, in particular,domestic water treatmentproducts. It is based inNewmarket, Suffolk, andemploys about 25 staff.

The company regardsmanagement systemstandards as a key tool inachieving success, not leastin helping it to establishlasting partnerships with itscustomer base and suppliersat home and abroad.Lettergold has achievedcertification to the qualitymanagement standard ISO9001, the environmentalstandard ISO 14001, and keyhealth and safety standards.

In May 2008, it becameonly the third UK companyto become certified to the

BCM standard BS 25999,which has since beenupdated to become theinternational ISO 22301. “Weoriginally sought certificationto fulfil a tender requirementand that’s happened acouple more times since,”says managing director Andy Drummond.

Lettergold has used itsBCM system to test itssupply chain. On oneoccasion it sought alternativesources for chemicalsnormally imported fromBelgium. “It helped usidentify an alternativesupplier,” says Drummond.“In a real exercise, we testedan alternative US source,which proved acceptable,although it added two weeksto the lead time and shippingcosts. The system allows usto make plans to mitigateproblems if they occur andprotect our reputation.”

“Standardsencourageoverseascustomersto dobusinesswith you”

Making excellence a habit

SUPPLYING CERTAINTY

9D E C E M B E R 2 0 1 2 / J A N U A R Y 2 0 1 3 D I R E C T O R

Making excellence a habit

1 0 11D E C E M B E R 2 0 1 2 / J A N U A R Y 2 0 1 3 D I R E C T O R Director Business wisdom

provides a best-practice frameworkfor firms to manage processes toensure they meet customers’requirements. Research has provedthat organisations with ISO 9001deliver improved customersatisfaction, boosting sales andprofits at home and abroad.

There is also rising overseasawareness of the ISO 9004standard – which is broader thanISO 9001, addressing therequirements of all the stakeholdergroups – as well as forinternational environmental andhealth and safety standards.

“Foreign customers andsuppliers understand the rigorousprocesses you’ve been through to achieve certification, especiallyaccredited certification,” explains Corrie.

“In the past they would haveasked endless questions andhassled you for information. Now,if you have these standards inplace, they can start with a muchhigher level of confidence in you.”

Corrie says certification can bea key differentiator: “Without it,you won’t get onto tender lists.”

The CE mark on a productmeans that a manufacturerclaims that it conforms to minimum legal

requirements – in respect of healthand safety, for instance – as laid down in European Uniondirectives. The EU introduced theCE marking scheme to allow goodsto be traded across borders withouthaving to be reassessed or adaptedfor each separate market.

The mark is mandatory formany products sold within the EU.But while certain goods – such asmedical devices and gas appliances– require rigorous, independent,initial and ongoing testing in orderto be CE marked, there are manyothers for which manufacturersneed merely to self-declare thatthey meet all the relevant legalrequirements without anyindependent verification.

This creates a problem formanufacturers and consumersalike. Consumers can neither becertain that makers’ claims for aproduct are justified nor that themark signifies genuine quality,while manufacturers that produce

to rigorous standards often feelthey have no way of demonstratingtheir superiority.

But there is a solution. Theycan acquire a BSI Kitemark, avoluntary, independent third-partycertification that gives assuranceabout their products’ quality and safety – and reassurance tocustomers and end-users.

To achieve the BSI Kitemarkcertification, a manufacturer must have a comprehensivequality management system basedon ISO 9001, or a recognisedfactory production control systemcombined with initial and ongoingproduct testing and surveillance.

Ian Kitchin, BSI’s commercialdirector, says: “While amanufacturer could merely self-declare, acquiring the Kitemarkshows that BSI has verified thequality of your products andprocesses. It provides a muchhigher level of assurance.

“The Kitemark is widelyrecognised in overseas markets,giving your products a high level of credibility in the eyes ofpotential customers.”

Signs ofreassuranceCE marking can offer overseas customers a measure of comfort about the quality of your products, but anindependent Kitemark provides a stronger statement

Amajor challenge forcompanies doing businessoverseas is how to win theconfidence of potential

trading partners. How can yourcustomers be sure that you’ll fulfilyour promises and how can yoursuppliers be sure you’ll pay them?

This credibility gap is especiallyawkward for SMEs, which lack thepower of a global brand and maybe unknown in foreign markets.

“International standards offer a solution because they arerecognised worldwide,” saysCharles Corrie, businessprogramme manager at BSI. “Theymean something to customers andsuppliers everywhere, giving yourbusiness much greater credibility.”

Corrie says that this isparticularly true of the ISO 9000family of standards, which haslong offered a systematic approachto quality improvement byadopting management principles.

The family includes ISO 9001,which has taken off in recent years,with the number of certificatesissued now numbering more thana million worldwide. ISO 9001

“If you havethesestandardsin place,customersstart outwith moreconfidencein you”

Bridging thecredibility gapMany international standards are widely recognisedaround the world, giving great reassurance to overseascustomers and suppliers

“Acquiring a Kitemarkgives yourproducts ahigh level ofcredibility inthe eyes ofpotentialcustomers”

Entropy Software puts vital information at our fi ngertips

— allowing us to access all our business critical

information, from all our locations, in one place

Allen Gorringe, Head of Environment – Saint Gobain

BSI Entropy Software™ provides a simple management solution for Standards that signifi cantly reduces the cost and effort neededto proactively manage risk, improve performance and help yourbusiness grow sustainably.

Used globally, by companies of all sizes, Entropy Software™ is helping organizations to achieve signifi cant improvements in the visibility, transparency and effi ciency of their governance, risk and compliance activities. From ensuring risks and regulatory requirements have been evaluated, to demonstrating your business is ethical and credible and one that people want to do business with, Entropy Software™ provides a number of powerful features that drive continual business

improvement throughout your organization.

To fi nd out how Entropy Software™

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T: +44 1908 815920E: [email protected]/entropy

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WB11572_BSI IoD A5 ad Entropy_Stg15.indd 1 03/12/2012 10:44