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Why your business should be in London

It was great to read this week's article in Newsweek about the success of London as Europe's premier city. As the capital of my country, and my home, I felt especially proud. Personal feelings aside however, Newsweek succinctly points out what it is that makes London the best place in Europe to do business.

If you've not yet read the full article, take a look here:

http://www.msnbc.msn.com/id/7529462/site/newsweek/

Naff personal transport

Ever seen anyone riding a Segway? "Bigger than the Internet," hyped Dean Kamen as he launched his self-balancing, motorised scooter. It was supposed to revolutionise human transportation as we know it, but crossing the Atlantic it met legal wrangles over safety - Segways are designed for the pavement, but this would require a change of law in Britain. That, and its high price (typically £2,800/$5,350), have meant that only about 50 have been sold in the UK.

When it comes to personal transport revolutions, we British have been here before. Inventor, Sir Clive Sinclair launched his one-seater electric vehicle in 1984. It was a commercial disaster and only 12,000 were ever made. Read more in this story from BBC News Online:

http://news.bbc.co.uk/1/hi/wales/3586264.stm

At £200 the C5 wasn't cheap, but this wasn't its main problem. The vehicle was demonstrated navigating busy city streets and potential buyers soon got the idea that they'd be sat at exhaust level in rush hour traffic. It also didn't look very safe.

The Segway has the same problem. OK, so you're not breathing in fumes while you ride it, but you still look like a wally/dufus. Grey in colour, weird - in short, it's just not cool. And it's image was hardly helped by Kamen in his helmet at its launch. Take a look at the photo - is this how you'd like to be seen?

It looks as though Segway may have realised this. New versions sport chunky off-road wheels and brighter colours. Its latest Centaur concept looks the business.

http://www.segway.com/centaur/

Whether Segway has the guts to manufacture it remains to be seen. It's likely to be even more expensive, so sales will be low. Yet, it could be the halo product that gives the brand the cool that it so desperately needs.

Would you like salad and a fruit bag with that?

Today, McDonalds's celebrates its 50th birthday. Well, sort of. It's 50 years since Dick and Mac McDonald opened their first restaurant - a drive through - in San Bernardino, California in 1948. However, the restaurant we know today came about through a meeting with a salesman called Ray Kroc. It was he that created the consistency of product and branding that is now so familiar in the fast food sector. Nevertheless, this master of global branding and marketing consistency isn't immune from the vagaries of modern consumers.

Corporate homogeneity has been hugely successful for McDonalds, as any British high street (or indeed most shopping districts of any city in the world) will attest. Many others have duplicated this business model such that today people of different cultures across the globe will sit down in almost identical suroundings to sip Starbucks Coffee, share Pizza Hut pizza, or gobble KFC chicken.

Yet the consumer landscape in fast food is changing, with higher expectations of choice and variety and a growing concern about obesity. McDonalds has answered back with new healthy choices and a comparison of the menus from different countries, even the US and UK, reveals that they're not so homogenous as they once were. Some analysts have criticised the company for confusing and alienating its core customers.

Yet the need for change is a powerful demonstration of the strength of local culture over corporate culture. McDonalds has been forced to bow to regional demands to stem a decline and maintain its success. It's clear that whoever you are, your product and brand will always need to be adapted when entering foreign markets. That McDonalds is able to at least attempt this is testament to its skill in understanding consumers, though it will not be easy for a company that's grown on regimented uniformity.

Other brands had better take heed. Though McDonald's universality puts it first in the cross-hairs, other chains will also become targets. The lesson is simple - understand your local market, then adapt to it or die. For some however, it may be a lesson that's just to hard to learn.

The weak Dollar and transatlantic opportunity

Conventional wisdom has it that when your currency is weak, it's a better time to begin or expand an export business.  And to a certain and very real extent that's true.  But is a strong currency a roadblock to export success?  I hardly think so.

Now's the time for UK and European companies to step up US marketing.

Since most UK and European brands enjoy an "assumption of superiority," now is the time to enter or expand your presence in the US market.  The higher prices you'll be forced to sell at can be justified (if within the realm of reason) by brand attributes -- that is, by marketing.  If you can make the business profitable when the US Dollar is at its weakest, imagine what the profits back home will look like when (as is inevitable) the Dollar regains some ground in currency markets.

In addition to the future benefits, let's examine the here and now.  When you spend marketing dollars today, they're relatively inexpensive.  So, you can afford to imbue your brand with premium attributes (via packaging, advertising, promotion, PR, etc.).  Your personnel and distribution costs are likewise less when converted to your home currency.  With the exception of the landed costs of goods sold, almost everything else is cheaper when reported to the home office.  All that's needed is to convince the American consumer that your brand is worth a little bit more (that's where we come in).

The export case is better for some US companies, too.

Here's where the reverse story isn't quite as appealing...but read on.  Since the US dollar is worth less, you can afford to sell your product for less in local currency and achieve desired margins.  Or, you can do like your UK and European brethren and maintain (or establish) a premium price point for your imported goods.  In the UK and Europe, there's also a certain caché to imports.  US brands remain aspirational.  Levi's jeans command a premium.  McDonald's is still something of a treat (and not just by children).  IBM and Dell computers are tops.  And of course, there's the iPod.

While you'll be spending more to do everything in the UK and Europe, if you build a pricing structure that is geared toward a premium brand position, these expenses will be tolerable -- and when the Dollar strengthens, the resulting decline in margin will be offset by lower effective costs to do business overseas.

Now, don't you feel like dusting off those expansion plans?

The opposing point of view.

Obviously this isn't advice that everyone can follow.  If you're in a commodity business and/or can't (afford to) build the trappings of a premium brand, then this strategy isn't for you.  Commodity or least-cost providers with only a local source of supply have a difficult time exporting when currencies work against them.  Here's where global sourcing might work to your benefit.  If you develop a source of supply outside your home market when your currency is strong, you can build greater profits into your current fiscal year while insulating yourself in the future from rising costs at home.

Great expectations

When Ken, my business partner from the States, came over to London recently, it struck me just how different the British and Americans are when it comes to expectations of service.

Every Briton visiting the US for the first time is amazed by the service culture that exists there. You simply get much, much more for your money. I remember my first experience having breakfast in a diner. I'd ordered pancakes, bacon, eggs, etc, but when a steaming basket full of muffins was placed in front of me I told the waitress she'd made a mistake. "Oh no Honey," she said, "these are just to keep you going." Well, if I'd eaten all the muffins I'd have had no hope of eating anything else! Such is the American way of life.

For the American visiting Britain then, the difference must come as a shock. Everything - cars, hotel rooms, your dinner - is half the size, yet twice the price. But that's not all. Those tasked with helping you - waiters, shop assistants and so forth - can seem taken aback by the American expectations. Ken is no different in this regard than your average US businessman, but watching him deal with various service personnel, I had to smile. Both parties, equally eager to get things right, often looked utterly confused about how they should interact with each other. And this is in London, a city used to visitors from across the Atlantic.

There's a big lesson in here for British and American businesses seeking transatlantic expansion. It's not as simple as offering more in the US and less in the UK. There are many subtleties in culture and the expectations this creates can be difficult to comprehend. To know what to ask for and when, what's appropriate, when to shut-up, when to shout-up - all these things are essential for smoothing the course and avoiding costly errors. Only a local can give you the answers.

Ken and I, an American and a Brit, help companies to understand and navigate these differences. This extends beyond our own marcoms business into advice about legal, financial, sales, HR, property - you name it. It's not that we have all the answers of course, but we know the people who do - people experienced in working with their transatlantic cousins.