Germany-based Virtanen Consulting (VC) an international management-consulting group, has set up a Middle East subsidiary to service clients from the IT, telecommunications, banking and finance, and service sectors.

VC said it would initially operate from its office in Dubai’s Internet City.
“VC’s principals have been consultants to major European companies for more than 20 years, so it’s only natural that we would establish a Middle East office that will enable us to get even closer to the markets on which we consult to our clients.  We have very high expectations for the growth of this market, and all economic indications are that it will continue to expand rapidly over the near to mid-term,” said Matti Virtanen, VC’s founder.
With economic growth conditions not too rosy across much of Europe, business development executives of Europe-based multinational companies are increasingly looking at the Middle East and Southeast Asia as new growth markets.
High economic growth rates in the Middle East, for example, seem enticing for investors who would like to seek a presence there or use it as a base for further expansion into the Asian Subcontinent where the market for outsourced service provision is heating up rapidly.
But do they realise the pitfalls they could face in entering the Middle East for example?
Middle East-based experts with VC say investors would do well to prepare themselves for Middle East ventures by first understanding the special issues they may face in the new market.
One of the challenges is in “time to profit” or how long it takes to make an investment pay off for any company wishing to enter a market. VC experts point out that with 23 per cent of new-to-market companies in the Middle East failing, time to profit can be a very important consideration.
“Every major company in the US and Europe wants to compete in the Middle East market, but not all know how.  And for those who don’t, ad hoc expansion into this region can be extremely expensive and frustrating,” said Jari Valvisto, Middle East-based partner with VC.
Studies conducted by VC indicated that more than 70 per cent of companies entering the Middle East market do not meet their original business objectives, while 18 per cent of new entrant’s customers are either dissatisfied with or very dissatisfied with these products and services.
According to VC executives, key reasons for failure of new market entrants are that they typically do not have any understanding of the market dynamics and business culture of the region; they fail to establish a solid strategy and implementation plan; they hold a “products out” rather than “customers in” approach; they underestimate competitive pressures to their offerings; and they do not accurately account for the speed and quality of recruitment.
“The VC ‘customer in’ approach encourages clients to consider proper customer target selection, then tailors all activity toward winning and maintaining customers, rather than forcing products or services at them,” said Valvisto.
The VC company already has operations in Germany and Finland, and its management team has extensive experience in the field of regional business development and local incorporation.