Expert Advisory Board Meeting
Expanding Business to the EU
A 30-year old family-owned company located in a U.S. Eastern seaboard city produces mid-range home furnishings sold through department stores and furniture chain stores. The company was contemplating a major expansion of its business into Europe, and was looking to establish sales offices in London, Nice, and Berlin, and to open a production facility in a location central to the major EU markets. Having held several ad hoc discussions with different people, and having conducted conventional focus groups with European end-users/consumers, the company was still apprehensive. It needed to have several highly specific questions posed to prospective European wholesale-buyers as well as to various European experts who consult with U.S. companies considering expansion into Europe.
To address the company's needs, a one-day Advisory Board meeting in Amsterdam was organized. The Advisory Board had 11 participants, which included 4 senior buyers from large department stores; 3 senior buyers from furniture chain stores; 1 lawyer specializing in U.S./EU business expansion; 1 leading economist in the field of European consumer spending; 1 former executive of a European competitor; 1 EU distribution expert.
The meeting began with a presentation by a company executive of the firm's history and its line of branded furniture products. As a basis for discussion, an expert moderator then detailed the company's concerns and the Advisory Board objectives. The meeting format was a combination of general discussion sessions and breakout sessions. In consultation with the company, the discussion was driven by 7 primary, and multiple follow-up questions:
- Given the risk of back-to-back recessions in Europe, what is the expected impact on the mid-range home furnishings market over the next 2-7 years?
- Where would be the optimal location for a production facility with regards to efficient distribution throughout Europe?
- Is there room in the marketplace, and would there be an appeal among consumers (by country) for a new line of products based on the company's U.S. designs?
- What is the best corporate structure to consider? Would it be politically and/or commercially and/or strategically advisable to form a joint venture with an existing European company that has an established distribution network within the EU?
- Having concluded that labor costs in Europe would be similar to those in the U.S., how stable are labor relations between management and the unions?
- How long are the wholesale selling-cycles and retail turnover-cycles in Europe for such products?
- What are typical payment terms? Is "just-in-time inventory" a common practice in this sector?
Equipped with new information and insights learned from the Advisory Board and from the Meeting Report and Analysis, the company's founder and its key executives were able to better assess the risk and mitigate the uncertainty regarding the expansion decision.