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Issue: July/August 2014, Posted Date: 7/8/2014
MANAGEMENT INSIGHT - The Secret to Successful Global Expansion is to Bring Your RATs & CATs Together
Indulge me a moment for bragging, but this month, my little CDMO made a very big jump. We became the first American CDMO with revenue under $1 billion dollars to set up operations overseas, opening a clinical packaging and distribution facility near Birmingham, UK.
We're the first, but I very much doubt we'll be the last. This is just too obviously necessary a move. As we stood on the Florida coast, squinting across the pond and thinking about a possible UK expansion, our clients didn't so much ask us to make our move, as throw us into the water. One client, whose support and business we very much appreciate, financed our set up costs. A week after our June 4th MHRA audit (that's the UK version of the FDA), we have two more clients already lined up and ready to begin work.
The UK is a first step on our learning curve. We will be moving into other markets as well, beginning most likely with Latin America. As CEO, it's my job to champion a strategy that will set a course for our future expansion. I'll let the CAT out of the bag, and share my strategy for getting ahead in the global RAT race (apologies). We are following the RAT/CAT virtuous cycle approach to creating and sustaining global advantage developed by Donald Lessard, Rafael Lucea, and Luis Vives in "Building Your Company's Capabilities Through Global Expansion", MIT Sloan Management Review, Winter 2013.
The RAT/CAT model proposes that any global expansion strategy must first meet the RAT test. RAT stands for relevant, appropriable, and transferable. I'll explain that in a moment. What excites me most about this strategy is that the RAT keeps company with a CAT; the cat being criteria for learning and transferring knowledge gained abroad back to home office. Most expansion strategies are so focused on exploiting the target country(ies) that they fail to take the time and energy to learn from their new markets. The RAT is only half the picture; you need a CAT to really make the most of your expansion.
THE RAT TEST
The...