Kalin Pentchev created an increasingly growing business out of confidence, determination and sheer luck. Building a company from scratch is complex and certainly takes some of these qualities to persevere, but must also take planning, analysis and strategy. While Kalin displayed confidence, which Professor Sarathy explained contributes to a company’s success, it was gained from his own determination not to fail, rather than from having an understanding of international marketing. Instead of using well-mapped out plans and strategy to guide his company, Kalin created a reactive business with decision-making occurring as issues and dilemmas arose. Unfortunately, as a result, he made several mistakes common to new exporters – failure to develop an international business plan prior to export; insufficient care in selecting distributors and partners; chasing orders instead of selective and orderly international marketing; and assuming that successful home market product and marketing techniques would work anywhere – which ultimately played a role in causing many of the issues he faced.
Failure to Develop an International Business Plan
A formalized plan in business, whether export, marketing or a standard business plan, summarizes what the manager has learned about the market place and how the company plans to reach its specific goals. Although Kalin researched information on the Bulgarian population in the U.S., he failed to gain his true potential by having a plan in place. For example, if he had analyzed all possible markets, he may have discovered a large and available market segment, like the ethnic communities, sooner. Furthermore, if he had not reached a sense of urgency and become desperate to sell his product, he may have missed that market altogether. Additionally, without a plan in place, he overlooked the competition, potential “what if” scenarios and marketing opportunities. Such analysis would have identified the online opportunities available and, as a result, he could have developed a website from inception, advertised it in his brochure, and lined up pre-sale orders even before the first container arrived. Finally, a plan would have helped break down every business operation, identifying the needed resources and their associated costs, estimating how long each activity might take and who should be responsible for them (i.e. girlfriend, friend(s), himself, etc.). Through this process, he would have recognized the immediate need for a van and possibly selected it over the Maxima, saving himself a significant amount of money. Similarly, walking through each operation would have outlined the shipping and packaging processes and he could have discovered sooner than fall 2002 the importance of developing partnerships with key individuals in order to save on costs.
Insufficient Care in Selecting Distributors and Partners
When Kalin began his company he did not have any business let alone import/export experience. While it is possible to build a successful business without prior experience, having the right partner(s) in place to assist not only financially, but to provide knowledge and guidance could have been an invaluable asset and helped him develop more efficient strategies. People provide a set of skills, experience and wisdom, and although he initially tried to form a partnership with his schoolmate’s father, when that proved unsuccessful he moved on alone instead of trying to find a replacement. In addition, selecting the right distributors is an essential component to business success. As recommended by the Basic Guide to Exporting, a U.S. firm should investigate potential representatives or distributors carefully before entering into an agreement, including, but not limited to, finding background information and trade and bank references. Unfortunately, Kalin failed to investigate his distributor and received poor service and damaged products, losing five...