New business model for Middle East export market ready to launch after energy industry consultation
A new business model aimed at helping energy-focused firms expand into the Middle East has been launched by HFI Consulting International following an extensive two-year industry consultation.
Bridgehead Ventures (BV) aims to meet the gap between the two main mechanisms of entry to overseas marketplaces - using export sales agents or setting up an in-county business establishment.
“The long lead times to revenues and increasing localisation policy pressures is challenging the export sales agent model and local presence normally means in-country business establishment is needed” said HFI managing partner Hugh Fraser, who has been supporting clients with their expansion plans in the region for 30 years and is a member of the GlobalScot network.
“It has become increasingly obvious that the Bridgehead Ventures model is needed to accelerate revenues and reduce the costs and risks associated with evolving to an in-country business establishment.”
The BV mechanism will offer key components such as a management agreement with HFI under which participant companies will be steered towards clear first revenue objectives; a joint participation venture with a trusted local partner; and a service agreement allowing shared access to an on-the-ground industry specialist interim general manager.
Although the BV team will work with companies on a one-to-one basis, the model is structured to allow management of a group of between five and 10 companies in parallel, enabling economies of scale on fees and costs, potential synergies between the participants and opportunities for cross-marketing.
HFI has been working on these proposals since early 2018 and, after an extensive consultation with energy-focused businesses who have ambitions to set up in the Middle East, several revisions and improvements to the model have been made.
Mr Fraser said: “We now feel that we have created a best-in-class solution to the very real tests which companies face when trying to break into a new market, namely the high costs, high risks and extended lead times when trying to go it alone in challenging territories such as the UAE, Saudi Arabia, Qatar, Kuwait and Oman.
“Current entry to market mechanisms are outdated and no longer fit for purpose, especially when there is now such a high-level focus on in-country value across the GCC. The BV model brings an innovative solution to the table, and we believe it will open the door to many companies seeking to internationalise their business.”