How do you deal with conflicts among market entry and expansion partners?

From our experience in cross-border M&A in Emerging Europe, it is essential to identify the POTENTIAL of conflict before even such a situation arises. The source of conflicts among market entry and expansion partners needs to be identified and dealt with as a priority, otherwise the very strategic partnership could be at stake.

Communication is a Two-Way Street: Often, conflicts arise not from differing views, but from feeling unheard. Active listening is as crucial as speaking one's part. Nonverbal Cues Matter: Tone and body language in video calls are harder to read (compared to in-person), raising the potential for misinterpretation. History: Historically, communication in partnerships tended to be hierarchical (top-down). This is less effective in knowledge-based work requiring broad information sharing. Current: Remote/hybrid workforces increase reliance on virtual communication tools. While convenient, they necessitate new skills to mitigate misunderstandings.

There's a saying that the greatest problem in communication is the illusion that it has taken place. On a transaction, we had a literal communication challenge, when the deal advisers hadn't made arrangements for the simultaneous translation of proceedings, during our team's presentation to the target company's management in a foreign country. However respect has no language or colour. With a little diplomacy and humility on our part, what was a real barrier ultimately turned into an opportunity to learn more about the cultural norms around doing business in the target company's home country. This actually helped us put resources in place to deal with language barriers in preparation for a possible future integration of both businesses.

Resolving conflicts with market entry partners is about finding common ground. Our global firm practices open dialogue to identify mutual benefits, ensuring all parties are on the same page. For example, when tensions rose during an expansion project, we facilitated a workshop focusing on shared goals, which turned potential roadblocks into stepping stones. This approach not only resolves conflicts but also strengthens partnerships for future ventures. Remember, the key to harmony is seeing through each other's lenses.

The majority of our Clients looking to expand to Emerging Europe have an in-house team dedicated to their market expansion and corporate development. It is them that approach us and select the FRD Center for our expertise, reputation and successful track record of Market Entry Services. Clearly, the common ground is to achieve their success in the Emerging European markets.

Even competitors may find unexpected value in cooperation ("coopetition") on areas of non-competition. The 'Long Game' vs. Short-Term Wins: Finding lasting common ground builds a stronger foundation than seeking only immediate wins at the expense of the greater partnership. History: In early industrial eras, vertical integration ("do it all in-house") was the norm. Globalization and specialization fueled a change. Current: Supply chain disruptions (2020 onward) further reveal the interdependence of modern businesses. Finding synergies is crucial. Success Requires Proactive Focus: Parties must consciously look for common ground; it often won't emerge naturally.

Managing conflicts among market entry and expansion partners requires diplomacy, clear communication, and an acute understanding of each partner’s goals and constraints: Define Each Partner’s Scope: Ensure that each partner’s role in the market entry or expansion strategy is well-defined from the beginning. Set Boundaries and Expectations: Clearly communicate the goals, milestones, and deliverables expected from each partner. Agreed-Upon Process for Dispute Resolution: Define a conflict resolution process within your partnership agreements, outlining how disputes will be addressed. Reiterate Shared Objectives: Remind all partners of the larger goals that motivated the partnership. Focusing on mutual success can help realign interests.

Escalation Ladder: Often, negotiation works for minor conflicts. As things worsen, mediation preserves relationships, while arbitration is a last resort. Hidden Costs: Time spent in conflict is time not spent on productive work. Conflict resolution saves on this indirect cost to the business. History: Early approaches often aimed for one "winner," not lasting resolution. Modern strategies focus on finding solutions that preserve the relationship as a whole. Current: Increasing workplace diversity demands conflict resolution skills adept at bridging cultural differences and avoiding "groupthink".

Types of Criteria: Don't rely solely on financial goals. Partnerships can have non-financial metrics like knowledge shared or innovative approaches developed Feedback Loops: Monitoring without analyzing is wasted effort. Ensure findings lead to concrete actions to improve or reinforce what's working well. Success Metrics Defined Early: Don't start a partnership without agreed-upon criteria for success, so monitoring has benchmarks. Evaluation Isn't Optional: Build routine evaluations into the partnership's process. This makes it a standard practice, not just a crisis response. Flexibility Matters: As circumstances evolve, success criteria may need revision too. Evaluation allows for ongoing adjustments to goals.

Many of our Clients - the foreign companies looking for market entry consulting tailored to their specific needs - target the Emerging European markets. Such markets, often called also "frontier markets", present numerous potential sources for conflict. As part of our role as a Market Entry Consultant is to advise the Client regarding local aspects that might have the potential to cause conflicts.