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In the association world, globalization usually entails partnering in some shape or form with counterpart organizations in other countries. Based on the many costs and challenges of going global, few associations choose to go it alone. Developing the right partnering arrangement for your circumstances and objectives is the most critical component to the success of your international operations. Of course, a partnership arrangement that seems right during the planning stages might wind up problematic during the implementation. Required is flexibility - an understanding that revisions will be needed as situations change and as you learn lessons from various partnering efforts. That is normal. But to get started with the highest degree of confidence possible in your initial partnership arrangement - and the strongest likelihood that this arrangement will be effective - you must put significant time and effort into research and planning. Guidelines are presented.

IT'S A BEAUTIFUL SUMMER AFTERNOON. As YOU ENJOY A COOKOUT IN THE BACKYARD WITH your family, you watch your children playing and think about how much the world will change in their lifetime. You realize how small the world seems today compared to when you were a kid. During just the past 10 years, you observed nationally focused organizations evolve into global entities. But those transformations didn't happen automatically; they resulted from careful planning and effective partnering.

In the association world, globalization usually entails partnering in some shape or form with counterpart organizations in other countries. Based on the many costs and challenges of going global, few associations choose to go it alone. Developing the right partnering arrangement for your circumstances and objectives is the most critical component to the success of your international operations.

Of course, a partnership arrangement that seems right during the planning stages might wind up problematic during the implementation. Required is flexibility-an understanding that revisions will be needed as situations change and as you learn lessons from various partnering efforts. That's normal. But to get started with the highest degree of confidence possible in your initial partnership arrangement-and the strongest likelihood that this arrangement will be effective-- you must put significant time and effort into research and planning.

The results of your research are the raw ingredients of your business plan. You need to study thoroughly what countries possess good market potential, what organizations might make good partners, what it would cost to establish operations and conduct business in each potential country, and what implementation strategies to consider. Collecting and analyzing this information will lead you to a wise choice from the wide array of partnership arrangements.

Business planning

considerations

Determine what you want to accomplish. Are you looking only to gain international members or to also sell them products and services? Will you be seeking partners in countries where the de facto language is English or in countries with diverse languages? What other considerations relate to your objectives?

Based on your present U.S. operations, determine what activities and resources would be required to accomplish your international objectives. What activities could be performed by existing staff? Would any activities require outside assistance from a local partner? Would another type of partnership arrangement work?

Now determine which partnering model best satisfies your needs. Ensure that whatever model you select reflects the results of your research, is marketable to prospective partners, can be implemented within your budgetary constraints, and supports your association's mission. This final consideration will be the most important in gaining the support of your domestic member base and of your board.

International business

partnership models

There is no one international business partnership model that works best for every association. To decide which model is likely to best serve your needs, it's important to understand what each one entails.

Equity-based model. An equity-based operation involves either an association's purchase of another organization or a merger of the two. This type of model might be employed by an association attempting to grow significantly and avoid potential competition in the international marketplace. Examples of objectives that an association might achieve through this type of business model are adding members, diversifying training programs, and gaining ownership of a certification program.

Given the financial nature of the nonprofit world, an equity-based arrangement is rare: Few associations have the desire or resources to take this approach. Additionally, depending on the country involved, such an approach could be perceived by the local members as another example of "Yankee imperialism." However, the advantages gained from consolidating operations are that the association has direct managerial oversight, and one organizational brand is established, avoiding the potential of conflicting identities.

Local partner. A local partner arrangement can take many forms, including a relationship with an independent distributor, a franchise agreement, or a chapter relationship. All involve an existing or newly created organization residing within another country and helping to develop an association on a local level. This is generally the most popular approach to globalization because it provides for a local presence in the country (or region) without the staffing and management requirements associated with an equity-based approach. Additionally, the related expenses are much lower and the liability is more limited. Associations that take this approach can promote their international nature, yet still feel local to their members-the best of both worlds.

As ideal a model as this may seem, there are several caveats. Because an association does not have direct managerial oversight over the local operations, accountability standards must be established as a part of the contract. Then there must be someone to oversee the work of the local partner to ensure that contractual terms are being met.

The selection of a local partner can be costly and time consuming, but once the partnership is established, it should involve only limited costs. Due diligence must be performed to ensure that prospective partners have a good local reputation, are appropriately capitalized, and have a mission reasonably congruent with the mission of the association. Local partners need a clear understanding of the association and what their role will be. If the association is one of several organizations with ties to a particular local partner, there must be clarity about how the association is to be represented by the partner.

Strategic alliance. Strategic alliances, more limited in scope and substance than local partner arrangements, involve shared responsibility for the development and execution of a particular program, service, or product line. These alliances capitalize on the individual strengths of each participating organization, benefiting from bringing together strengths in such areas as operational management, market positioning, and brand recognition. Expenses are usually shared.

Strategic alliances limit a participating organization's liability to the scope of the project involved and provide reduced-cost opportunities and expertise. Moreover, each participating organization retains its own identity. However, because brand identity is shared with the allied organization, an association's program, service, or product is subject to any changes in how the allied organization is perceived by its customers or members. Still, strategic alliances are probably the best model to consider for an association seeking limited development.

Internet-based model. Many associations are now taking advantage of the Internet for membership registration and maintenance, conference registration, and a multitude of other business applications. Using the Internet can be a costeffective means of globalizing an association; this approach is ideal for small associations with limited resources.

As many solutions as the Internet provides, it creates new challenges. Despite its ease of access, for example, the Internet requires promotion to drive people to a Web site. Once they get there, some of the questions will be: Are they familiar with the language used on the site? Will dues and other fees be charged in local currency or U.S. dollars? Will there be alternatives to credit card payment (in many parts of the world, people prefer to pay by cash or check)? Are there mirror sites in various geographical locations to account for slower modem speeds?

Member relations is the lifeblood of an association. It's difficult to think of a profession or industry with which the related association could build and maintain a member base without some personal contact to reinforce the prospect's decision to join and the member's decision to renew. Therefore, the Internet, placed into context, would be best suited to complement and reinforce another international business strategy.

Hybrid. By combining elements from the models above, a hybrid can be formed that fits an association's particular needs. This could mean that membership registration is centralized through the association's Web site, while a local partner or strategic alliance translates and distributes the publications and educational programs.

Choosing a model. It cannot be emphasized enough that there is no one correct global partnering model. The right model for your association is the one chosen through careful business planning that takes all factors into consideration and permits some flexibility for changing conditions.

Once you select a model, it's time to define how it will work. You'll need to map out workflow processes and delineate responsibilities for all parties involved. Expect to do this several times, each time creating different scenarios based on different financial and marketing models.

Financial model

Create a financial model based on your objectives. Are you seeking to develop operations that will ultimately result in a contribution to surplus or merely function as a breakeven operation? What costs will be associated with your global partnership arrangement? Costs include everything from estimated developmental costs, to day-to-day operational costs, to legal expenses. Remember, it's better to overestimate costs from the start than to be in a position of having to return to your board later for an additional capital contribution. Doing the latter will give skeptics on your board an opportunity to question the validity of having international operations.

It is crucial to know how well capitalized your prospective partner is and to determine what the partner's costs will be. For example, if the partner will incur high start-up costs for such things as staffing, legal, translation, and printing functions, there may be a limitation on the amount of resources that can be allocated to marketing your program. With fewer resources devoted to marketing, it may be difficult to achieve the initial projections used in establishing your model.

Other things to consider include local pricing schedules, market volatility, and currency fluctuations. Although your member dues and other fees may be priced at what would be considered fair market value for the United States, the same may not be true for other countries. If you can obtain the data, find out what the average per capita income is for your domestic members, then divide your annual dues by that figure to determine the percentage of annual income your dues represent. Now, for each market in which you intend to have operations, do the same, but convert the local currency income to the U.S. dollar equivalent and use your domestic dues amount to perform the same calculation. Although not intended as a scientific means of determining pricing, you will quickly see that the pricing schedules used in the United States may be totally unsuitable for another market. You will need to determine who will establish pricing and how much latitude will be granted for adjustment. Keep in mind that if prices are established in local currency, as they usually are, the revenue you receive from any local partnership operation will be affected by market volatility and its impact on international currency exchange rates.

Marketing model

Next, develop a marketing model that answers the questions of which markets to enter, in what order, and in what time frame. Outline who will do what, with whom, and how.

In most cases you will be limited to contractual control of a local partner's marketing activity, so be clear on expectations and include in your contract some language pertaining to marketing obligations. However, don't get too specific. Cultural constraints and variations in business practices do exist and must be considered. Focus on achieving objectives and revenue targets, not on the means by which they are achieved. Of course, if your association plans to directly allocate resources and engage in marketing activities in other countries, you need to be assured of your local partners' cooperation and compliance. Unless you have an equity-based operation, your primary (and perhaps only) means of establishing accountability and compliance will stem from the terms of your contract.

For maximum efficiency, determine what marketing systems are universally applicable. Although there needs to be room for flexibility, standardize as much as you can to facilitate the management of multiple country operations. Doing so will allow you to streamline operations, saving you time and money. It will also establish consistency and advance the development of an international network, even in the absence of an equity-based partnership.

Measuring performance

With any global partnering arrangement, accountability standards need to be established at the start of the relationship and clearly articulated to all parties. A local partner might firmly believe it can realize rapid growth of a program, only to realize a year or two later that there was more to getting the program up and running and establishing an identity. It's important for a local partner to understand what is expected and what the ramifications will be if expectations are not met.

Based on your financial and marketing objectives, determine and formalize in your contract minimum activity standards. Whether or not you choose to hold your local partners to these standards is a decision to be made on an individual basis, but be careful not to set a precedent that could allow other local partners to accuse you of inequitable treatment. Extenuating circumstances may occur, however, where making exceptions or compromises would be in the best long-term interests of all involved.

Domestic staffing

considerations

Now that you have formed the basis of your international business strategy, consider its impact on staff. Although most of the operational activities are likely to be conducted by any local partners in your globalization plan, your staff will need to address issues related to managing the partnership and overseeing the work.

Generally, plan to have at least one staff person serve as the principal contact for your local partners, manage the relationships, and ensure that your association is fulfilling its obligations to partners. You may need someone who has international management and marketing experience, has foreign language skills, and is sensitive to cultural differences. You may also need to retrain your existing staff on new accountabilities related to international operations-international invoicing, mailing and shipping procedures, cultural sensitivity, and so on.

Legal issues

Many legal issues must be addressed when creating global partnerships. We all know how expensive legal fees are, but they are much less costly when put in the context of potential lost revenue from stolen intellectual property or, even worse, a lawsuit. To minimize legal expenses, before you call your attorney, have a clear understanding of what you want to do and how you want to structure your global partnering arrangement. If you are experienced in writing contracts, you may want to create a rough draft.

While you want to be sure that your property is protected and your liability is minimized, you still need an arrangement that you can sell to prospective partners. Weigh the advice and suggestions you receive against your business objectives. When in doubt, rely on your attorney's advice.

Exit strategies

All global partnering arrangements require exit strategies. These serve as your contingency plans if something goes wrong or if there is a change in the direction of your association or your partner Is organization. Creating exit strategies can be rather difficult, as they're based on many factors: organizational issues, international relations, sociopolitical climates, economic conditions, and more.

In your partner contract there needs to be a section defining the provisions of when and how you could terminate the relationship and any associated costs in doing so. Generally speaking, you would only terminate a relationship if it was not fruitful, or a provision of your contract was violated by your local partner, or your local partner was damaging the reputation of your association. However, legislative changes or political upheavals could nullify an otherwise successful relationship and result in its termination. Although rare, it is a possibility that needs to be accounted for.

Keep in mind that contracts do not address what strategies to employ to compensate for the loss of revenue from a partner. That is something that needs to be a part of your overall international business plan.

Selling your plan and

achieving consensus

Most likely if you are considering a global partnering arrangement, you will be working with a committee of board members to conduct the initial research and formulation of recommendations to present to the entire board or the executive committee. How you present your business case will go a long way toward achieving consensus. Form a compelling, well-written proposal. Include information on market potential, prospective partners, financial projections, and any other relevant data and analysis that will reinforce your proposal. Supportive member-opinion survey results can also be excellent selling tools.

Your board will most likely prefer to have multiple options to choose from, including the anticipated outcomes of each scenario and a recommended option. Include at least three options in your proposal, beginning with the lukewarm option, followed by the least favorable option, and ending with the most favorable one, plus your recommendation. Although not foolproof, by placing the worst and best options next to each other, you will probably invoke the persuasive principle of contrast. Since option two will almost certainly be objectionable to all, the relative merit of option three will be apparent and the likelihood of getting consensus on your recommendation will increase.

Be prepared to receive objections. just remember that you have had months to review data and become intimately familiar with the proposal; your board might not have had the same opportunity. Seek first to educare, then clarify the true objections when voiced, and reference your business case and supporting documentation to overcome objections. With only four true objections to overcome-no money, no need, no time, and no trust-you can do it.

The global partnering approach is not without challenges. While extensive research and planning will greatly improve your chances for success, things that you did not consider at first will become clearer as you become more experienced. Changing market conditions may cause you to rethink your strategy. Just remain flexible and take heed of the global partnering lessons learned by other associations.