Arizona companies go global for growth

Jan B. Jacobson
The Arizona Republic

 

For Arizona companies trying to extend their reach beyond North America, the global marketplace can be vast and confusing. Foreign labor laws, confusing import and export duties and the fundamental difficulties posed by the language barrier keep many business owners at home.

But for those who venture out, the rewards can be great.

“I believe that working online has been a boom to globalization, bringing everything to our fingertips. Even small companies can benefit from and tap into international markets and resources for growth,” said Omar Sayed, founder and chief executive of Succeed Corp.

Donavon Ostrom (right), managing director of Outsource International in Scottsdale, works with Professor Morteza Abbaszadegan at an ASU lab.

He and executives from Kahala Corp. and Outsource International are among those who have discovered the benefits of doing business abroad, and they have some tips for the internationally minded business owner.

 

“It’s important to have an outlook that is open to seeking opportunities outside of the United States,” Sayed said. “It was very favorable in our case, finding development partners. We leveraged a strong U.S. dollar to develop our technology at a fraction of the cost. As a result, we were able to pass savings to our customers and offer our product at a competitive price, which fueled our growth.”

Mesa-based Succeed Corp. is the fastest-growing software company in Arizona. The company offers a suite of Internet-based e-commerce tools, the most popular being iBuilder. It was just listed as No. 50 on Inc. magazine’s top 500 growing companies.

Sayed is a native of India and has lived in 35 countries. He has worked with import-export businesses since he got out of college, where he studied computer science and physics. He started the company in Florida but moved it to Arizona 15 years ago. The self-funded company employs 180 in Mesa and 100 internationally.

“You must do preliminary research . . . communicate online, then must travel and meet face to face to develop the right teams,” Sayed said. “Many companies don’t see working abroad as an opportunity and are intimidated by the idea because of concerns with the language and the unknown.

“English is widely used in many distant centers and is not a barrier. Companies abroad are very receptive to American companies. There is a level of risk dealing with other countries, but it can be overcome. Business knowledge, trust and respect are important to international partners.”

Do your homework

Lee Knowlton, president of the international division of Kahala Corp. in Scottsdale, said, “The biggest challenge to expanding globally is to find the right country and right partners to launch successfully. You must do due diligence before you go, researching and identifying potential partners for your product or service. You must be prepared to provide ongoing support and commitment and to dedicate resources to make the opportunity strong and successful.”

Knowlton should know. His company is one of the fastest growing in North America in the business of franchising, developing and marketing for quick-service restaurants. This privately held corporation operates in 15 countries worldwide with 13 brands, including Blimpie, Taco Time and Cold Stone Creamery, with 4,600 retail locations and sales of $1.1 billion. It has nine people in its international division supported by 200 in its domestic operation.

But he cautioned, “You must stay true to your concept and realize that you may not be able to just pick up your product and take it. You may have to tweak it.”

He explained that when the company opened Cold Stone in Japan, customers wanted more fruit-based ice creams, and in the Middle East, they wanted coffee offered with the ice cream, so Kahala modified its menus accordingly.

“There is so much opportunity outside the United States,” Knowlton said. “We bring our own unique experience and grow the brand internationally. If you feel you have to change your brand or experience to go into a country, you shouldn’t go there. Stay within your experience. . . . Getting out of your area of expertise leads to failure.”

Follow the money

Donavon Ostrom, managing director of Outsource International in Scottsdale, has been doing business abroad since 1994. He joined with Richard Mahoney, former Arizona secretary of state and a former professor of the Thunderbird School of Global Management, to help Arizona companies evolve by providing early capital and people to run them.

Outsource International also offers business-acceleration services to emerging companies, including sales, marketing and management support, and assistance raising capital.

Outsource International has spent 14 years creating jobs and building companies here that have a global reach.

World as marketplace

“To be successful in business today, you have to look to the international marketplace and to sell throughout the world,” Ostrom said.

“We have the ability to reach out around the world, to help clients enter new markets and generate more opportunities for their products and services by bringing relationships and resources to the table.”

Ostrom says the biggest issue for global outreach is being properly capitalized.

“You have to have the right resources in place, both human and capital to succeed,” he said.

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