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Contracts & Commercial – expanding horizons

March 19, 2012

I am often surprised by the lack of interest shown by many contracts and commercial managers (and in this I also include Procurement) in international markets.

Based on my experience in talking with , and developing programs for, this community, I would say that about 65% appear to consider ‘international business’ almost irrelevant, 25% consider it relevant in the sense of doing business with international markets and just 10% are engaged in the challenge of doing business in overseas markets.

My purpose is not to debate why people feel this way, but more to suggest that a much higher proportion need to adjust their thinking and outlook. There are several reasons for this – not least that globalization is challenging many of our assumption son how to do business and we need to be at the forefront of understanding and managing those changes.  But perhaps most important for the established contracts and commercial experts (most of whom are today based in the traditional economies) is that so many of the future opportunities for business will be based in overseas markets.

Several items in today’s Financial Times illustrate the point. In discussing India, an analysis highlights the critical importance of a ‘much needed overhaul of the nation’s infrastructure’.  It goes on to suggest that ‘for the first time, Delhi plans to share investment costs equally with business, creating a multitude of opportunities for domestic and global companies’. Another column points to the emergence of opportunities for the oil industry in Russia, suggesting that Government policy will open Arctic development opportunities to foreign firms with the expertise to deal with complex, high risk projects. And while opportunities such as these unquestionably demand high levels of technical competency, the history of project management clearly points to a similar need for commercial competence – in particular, an in-depth understanding of business culture, finance, relationship management and contract governance.

Businesses that depend on traditional contract and legal skills, or who take it for granted that their ‘cultural and business superiority’ will ensure success, are likely to be disappointed. As another article highlights, “Knowhow is needed for real-world problems’. And a letter from Rakesh Rawal, Chief Executive of +91 Europe, sums it all up when he warns of the costs associated with xenophobia. Openness, flexibility, dynamism and the welcoming of foreign capital and ideas – these are fundamental to competitive advantage for businesses and for individuals. It is time that the contracts and commercial community expanded its mind and its interests, to grasp the business needs and opportunities of tomorrow.

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