3PL strategies for moving to new markets

One way to develop a business is to enlarge its scale, by expanding into new markets or new regions, either by organic growth or through acquisitions. Depending on each situation, culture and market, it is possible to do both, which is how the Raben Group expanded.

Raben decided to follow the organic growth route in countries like Holland, Poland, Ukraine, Estonia, Latvia and Lithuania, implementing its own processes and solutions to match the company’s organisation culture, mission, strategy and products, It also enabled the Group to spread its investment over a longer period.

One of the drawbacks of setting up a new business in a new country is the "waiting period", when potential customers adopt a "wait and see" attitude while the new business establishes its reputation.

Raben went with the acquisition strategy in Germany, the Czech Republic, Slovakia and Hungary.  The acquisition process is complex, with many dimensions influencing its outcome, and the acquisition company could be either stable or unstable.

While due diligence may reveal that a target company is financially sound, its operations, management culture and customer relationships may not be quite so healthy.

A stable company has a history of good financial performance, competent management, efficient operations, a good portfolio of customers and a respectable market share.

Buying an unstable company that has performed poorly carries the risk of inheriting ineffective management, unacceptable operational levels and dissatisfied customers.

The upside is that the new owner could instil its company culture, implement tried and tested procedures, and inspire management with career growth opportunities. The downside is that it could take a long time to build up a good reputation and recapture a decent market share.

In either case, a well thought out integration plan is crucial.