It’s all happening! Your business model has proved robust enough for international expansion. You have potential business partners lining up in overseas markets. What are the next steps?
First establish the commercial objectives of the exercise and prepare an execution plan. This should be broken down into target territories in order of priority and referenced back to your original business plan.
Intellectual property management
One of the key foundations of your international expansion strategy must be an effective intellectual property management plan which:
- Increases the intangible asset value of your business;
- Facilitates raising funds for expansion;
- Builds superstructure for distribution and licensing;
- Anticipates competitor threats; and
- Reduces business partner, employee and third party risks.
Rights of ownership
Don’t just rely on the commissioning rule. Pre-empt potential ownership issues with employees and contractors involved in the creation of intellectual property for the business. This category can include computer programmers, designers, manufacturers, even administrators, marketing and sales staff.
Trade mark registration
Apply to register your business’s trade marks in the target territory well in advance of business activity commencing. Supplement this with an ongoing defensive trade mark protection strategy.
All original material should carry the business’s copyright notice, updated on a regular basis as new material is developed. Although there is no formal copyright registration process in New Zealand, copyright notices are useful evidence in ownership disputes.
Confidentiality & non-disclosure
Prior to supplying any commercially sensitive information, confidentiality or at least non-disclosure terms should be agreed with all prospective employees, contractors, business partners, investors or licensees.
Monitoring and infringement policy
Ideally this policy should be implemented in all target and active territories. For it to be effective, adequate funding for legal enforcement action must be always available.
Testing the strategy
Let’s look at an example - a drive-through coffee franchise started by Craig Muzzeroll in Perth in 2001, and known as “Muzz Buzz”. As at June 2012 there were 47 “Muzz Buzz” outlets in 4 Australian States.
Muzz Buzz had long term plans to expand to New Zealand. “Muzz Buzz” and “Muzz Buzz Drive-Thru Coffee” trade mark applications were filed in 2003, however Muzz Buzz didn’t open here until August 2012.
Meanwhile, in 2011 a rival coffee operation called “Jitta Buzz” had set up in Auckland, with2 outlets looking remarkably like those of Muzz Buzz. When they found out, Muzz Buzz immediately filed to protect “Buzz” as a trade mark, and then went to Court to shut Jitta Buzz down for intellectual property infringement.
MuzzBuzz were unable to obtain an interim injunction and the case is now headed for trial in March.
Muzz Buzz Franchising Pty Ltd v JB Holdings (2010) Ltd HC AK CIV 2011-404 -007338 [26 September 2012]
Rating the Strategy
Muzz Buzz appear to have had an IP protection strategy in place well in advance of expansion into New Zealand. Despite this, the business ran into unanticipated and expensive problems.
How could the strategy have been improved?
Thinking outside the box
Muzz Buzz apparently didn’t appreciate how competitive and aggressive the New Zealand business climate has become.
Potential business partners are also potential competitors.
The Muzz Buzz strategy didn’t help them to predict what could go wrong with their New Zealand expansion plans.
What to do next time?
What can be missing in some international expansion strategies is a holistic approach. Businesses may restrict their level of inquiry either for reasons of cost or perhaps fromlack of foresight.
Given the severe financial implications when international business goes wrong, it’s essential to be able to identify the latent risks in any given scenario.
Reducing risks and maximising opportunities
Our Business Growth Law® Program helps businesses to reduce risks and maximise opportunities when expanding internationally.
For businesses which qualify under the NZTE Capability Development Voucher scheme, supplementary government funding of up to 50% of the cost of our Program is available.
(From our Christmas Newsletter 2012)