- Players: Brendan Horan, MD, MiX Telematics (Africa) and Stefan Joselowitz, founder
- Company: MiX Telematics
- Established: 1996
- Visit: mixtelematics.co.za
Together, the senior management team are focusing on building a global footprint for MiX Telematics, while staying true to local market needs as well.
- International expansion strategies for businesses looking for top line revenue growth
- How strategic acquisitions can help corporates enter — and understand — new markets
- Ensuring the products on offer are suited to global expansion.
In 1996, Stefan Joselowitz had the idea to develop a vehicle tracking recovery system that triangulated cell phone tower signals and would help with the recovery of stolen vehicles.
This was long before GPS was available on every smartphone, and there was one glaring problem with his concept: The team of engineers he was working with could only develop a system that could track a vehicle to within a few kilometres.
This narrowed the search, but not enough to be of any real practical value to a company trying to recover a vehicle.
An Unexpected Solution
At a loss for what to do, Joselowitz took time out and went on safari with his family. It would prove to be the spark his business needed. On their first morning at the game lodge, their ranger asked what they most wanted to see. Joselowitz’s answer was simple.
He wanted to see a cheetah. Eager to oblige, their ranger pulled out a satellite-like device that they used to track animals (who had GPS collars) within an area of a few kilometres.
This wasn’t a device that took you to a ball-park area – it was accurate to within a few metres, and gave Joselowitz the vital insight that he needed to get the first version of his product to market.
By combining the system his engineers had built with the device the rangers used, he was able to track vehicles to within a few metres and launch the business, Matrix Vehicle Tracking.
This product would be the first step to building MiX Telematics, a company that now boasts revenues of over R1 billion and tracks over 500 000 vehicles around the world. However, while the South African market was an important foundation for the business, global expansion has been vital to its growth.
Starting as a local consumer business in South Africa in 1996, MiX Telematics has grown into one that operates in over 120 countries,with a global footprint that includes owned-businesses, value added resellers and service points spanning six continents. While there have been many lessons along the way, there is no question that Joselowitz and his team have successfully executed a global expansion plan.
Successful international expansion offers a massive opportunity for businesses looking for top line revenue growth, but the international stage is littered with failures, including Barbie’s botched launch into China and Starbucks’ unprofitable move into Australia.
Even some of South Africa’s most successful companies have struggled with international expansion. Discovery posted huge losses when it first tried to enter the US market and Woolworths’ unsuccessful attempt to launch a chain of stores in Nigeria ended with each store closing due to poor performance.
The MiX Telematics story has a few key lessons that can help growing businesses evaluate when and how to expand their companies globally.
We have used the ideas of Anil Gupta, author of The Quest for Global Dominance and one of the world’s leading thinkers on the framework of going global, to evaluate MiX Telematics’ globalisation strategy and how it can help you to grow your business.
MiX Telematics’ global expansion began with a merger with OmniBridge, a company that designs and manufactures hardware and software solutions for businesses to better manage their commercial fleets.
At the time, OmniBridge’s customers included fleet management, bus and coach, and logistics companies, and their products were sold in over 75 countries.
A further string of acquisitions, including Tripmaster (US) and SafeDrive International (Australia and UAE) gave MiX Telematics offices in key markets around the world.
Certain industries and products are better suited for globalisation than others. For example, restaurant chains, hair salons and hospitals have a large percentage of market share controlled by local businesses.
This is due to the industry structure: Limited research and development (R&D) intensity, lower economies of scale, a high degree of localisation and the product or service requiring local infrastructure.
Other industries and businesses are better suited to going global. These include pharmaceuticals, mobile phones and semiconductors. These industries tend to have a high R&D intensity, low customisation requirements, multinational customers and large scale advantages.
In its original form, Matrix Vehicle Tracking would have been nearly impossible to take global, as the market need is unique to South Africa. However, fleet management systems are purchased in all markets around the world. In addition, many multinational companies require integrated reporting from their divisions in different countries, giving an advantage to a global player that can service multinationals in all of their markets.
A key lesson is to ensure that the business or product is suited for global expansion. Founders should study their specific industry and business characteristics to decide on the rate and extent of global expansion. In Joselowitz’s case, this required taking an existing product and capabilities, and adjusting them to meet different market requirements.
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Adapting to Markets
A common reason that many companies fail to succeed in foreign markets is that they don’t take into account the unique local operating conditions.
MiX Telematics’ localisation strategy centred on a standardised fleet management system with enough customisation options to meet the needs of clients in different countries, allowing the same product to be deployed and customised without having to do any special integrations.
The company also created unique strategies for different markets. In developed markets with higher levels of competition the team realised the need to focus on a single industry vertical to gain traction.
For example, they focused on bus and coaching companies in the UK and the oil and gas sector in the US. By becoming an expert in a sector, they were able to grow in developed markets.
A degree of localisation is an important consideration in any expansion strategy, but you do need to find a balance. If you totally adapt your product or service to your local market and change everything on offer, you lose any cost or integration savings that you may have. On the other hand, if all services are standardised in every market there’s a high chance that local needs won’t be met.
You need to find the sweet spot. Key areas to research when formulating a localisation strategy include: The needs of the customer, capacity of local suppliers, infrastructure, culture and linguistic differences, and finally government regulation.
Start Small, Learn Fast
MiX Telematics manages the risks of entering new markets with a phased-entry approach. The team first sets up a service point in the country.
If that country is getting traction or is a strategic market, it looks at finding a value-added reseller though a rigorous due diligence process.
This strategy is one that enables MiX Telematics to learn about the market before investing resources. It also helps it to tailor a growth strategy for each specific market based on local knowledge.
One of the common reasons that international expansion efforts fail is a tendency for companies to enter a new market with a fixed plan and major investment. For example, Intuit failed in its first global expansion plan by expanding too quickly with little knowledge of the different markets it operated in. A better approach is to start small.
A focus on learning and developing a new, market-specific strategy that emerges over time, and is based on real data, will allow the company to determine what works in each market, ensuring sustained success. It also takes less investment, because the growth can be slower and more organic.
MiX Telematics has proven that South Africa has both the talent and skills to build global businesses that can compete and win around the world. With tough local operating conditions, it might be time for your business to start competing on a global stage.