With the countdown to Europe’s historic expansion on 1 May now underway, European business leaders talk about how to work more effectively outside native habitats.

Expanding to a global business has been a necessity at most companies, big and small, for some time. Yet many executives still stumble when they push products across borders and seek customers in diverse foreign markets.

Some European business leaders with successful global track records offer advice on how to avoid problems.

A global marketplace has its advantages but there are risks

Globalisation doesn't mean standardization. Technology has made travel and communications across continents easier, but customer tastes still vary enormously from country to country. Companies need a unique strategy for each place they do business, rather than trying to push the same products or services in the same way across borders.

Procter & Gamble, which has been selling its diapers, detergents and other consumer products in many parts of the world for most of the last century, forgot this lesson in the late 1990s.

For example, P&G tried to alter the European deodorant market, which is 80 percent aerosol, by introducing its Secret solid stick and roll-ons across the Continent. European customers rebuffed those products and P&G's sales and market share slumped.

Under Paul Polman, a Dutchman and P&G veteran who was named president of western European operations two years ago, the company fixed that problem by continuing to push aerosols, too.

Polman knew he had to cater to local habits. In Germany, most customers shop at discounters, many of which don't offer P&G's premium-price diapers and other brands. He launched a media campaign to advertise the superior performance of Pampers diapers, to try to convince customers that the brand is a good value.

Since then, sales of Pampers in Germany have picked up. He also scrapped plans to push some big American-identified brands such as Crest toothpaste throughout the Continent, and instead packaged the product under names that would have local appeal. Crest toothpaste is called Blend-a-Med in Germany and AZ in Italy. Both are selling well.

"In the US, we sell through drug stores and supermarkets, while in Europe sales are often limited by law to pharmacies," he says. "So you adapt. You take the best of what works everywhere while adjusting to consumer needs and executing the dickens out of it."

While products must be tailored to different markets, a company's standards of quality should remain constant. UBS of Switzerland, the banking and financial-services company that now derives one-third of its revenue from the US, emphasizes client responsiveness. All units of the company now use the name UBS.

"But we learned that when it comes to creating an integrated company, our name counts for just 10 percent, while 90 percent of branding is what we stand for," says Chief Executive Peter Wuffli. "Wherever we are, we want to be known for listening to client needs and providing solutions."

Siemens, the big German electronics and engineering conglomerate, does 80 percent of its business outside its country, up from 50 percent in 1992. Now, 60 percent of its work force is employed outside Germany. "We need employees and managers who are close to our customers and understand their needs," says Heinrich von Pierer, president and CEO.

Under his leadership, Siemens relies on local managers to oversee operations around the world. US-based businesses have mostly American managers, for example, while Italian-based units have Italian managers.

In China, von Pierer has instructed his 200 managers, who are mostly German, American and other westerners, to groom Chinese managers as their successors. That transition will occur over the next five years, he says.

Siemens's top management team remains German, however. "English increasingly is becoming our company's common language, but the rules and culture in Germany are still a bit different," says Mr. von Pierer.
He says he wishes more young foreign employees would spend some time in Germany. "Whether the head of Siemens has to be German remains to be seen," says von Pierer, who has been CEO for 11 years.

Continually assess new and old markets. Siemens operates in 190 countries, and is growing rapidly in China, where it has 20,000 workers. Its biggest market is in the US, where it employs 70,000. Over the past two years, von Pierer has increased investments in Russia and India.

"There's more stability in Russia now, and India, which has a strong, educated middle class, sees China overtaking it and wants to grow too," he says. "We want to be everywhere."

Other executives believe their time is wisely spent determining where they don't want to be. Corrado Passera, managing director and CEO of Banca Intesa, the big Italian bank, decided to move out of all Latin American countries except Peru since he took over in May 2002.

"There were better opportunities for us in Central and Eastern Europe," he says. "Sometimes globalization means deglobalization."

January 2004

Subject: Working in Germany