Diversity & Synergies
The European Union has created many rules and regulations. Too many perhaps!
But it is evident that conditions for international business and free trade between the EU member states have become more favorable, step by step. Examples are the common currency, the unified bank account number system for easier international payments and many harmonized product norms and certifications.
Therefore, companies that are established in European markets, should pay attention to new opportunities that could improve the efficiency of their international processes. And newcomers in the EU-market can create an appropriate lean organization right from the start.
However, the proximity to the customer should be kept in focus. The regional diversity of Europe demands close contact to local stakeholders, openness for regional differences and a high flexibility.
Usually it makes no sense to setup each international branch office as a stand-alone company. In particular in the EU, it is recommended to centralize important logistic and administrative tasks. Also, many staff functions, like finance, marketing services and certain HR-responsibilities can be provided to a great extent from one location only.
An important precondition is an IT-system that can handle international business processes and that can be operated by employees on site in all locations.
How to setup a so called shared service center and which advantages and disadvantages must be considered, strongly depends on the business model and the industry involved. Nevertheless, each corporation with international operations should devote attention to this subject.
Neglecting the importance of customer proximity is the greatest danger of operating a shared service center. Care and service for customers should not deteriorate, if processes are centralized across borders. Furthermore, listening to the local marketplace should not get lost.
A good command of the local language and the personal attendance are often essential for a customer-oriented presence on the market.
Whether for B2C or B2B markets, whether entering foreign markets or reorganizing the existing international company structure, a good shared service center concept takes into account both cost-efficiency and customer orientation.
Do you need a local branch office to be successful in a country? And if so, what legal form and company structure?
Here, not only business model and industry are decisive. Also between countries should be distinguished. A branch is often established in larger rather than in smaller countries. So, does the size decide?
Some country groups might be managed by only one branch (Scandinavia, Benelux, DACH, UK-Ireland). But it is often found that the market share in the country with the branch office is the highest.
A shared service center organization with lean structures in each country could be the better solution. It is an efficient structure that takes full account of diversity in Europe by improving customer proximity.