Analytical Graphics, Inc. (AGI), of Exton, PA, develops software applications and development tools for timely and cost-effective development and deployment of space, defense and intelligence missions. AGI products are used for modeling, engineering and operations in the areas of space, cyberspace, aircraft, missile defense, C4ISR and electronic systems. For example, AGI software is utilized to identify space debris, develop government defense planning budgets, track satellite orbits and for a variety of other purposes. Started in CEO Paul Graziani’s living room in 1989, AGI has since grown to 200 employees in its U.S. headquarters and more than 270 employees in total. To date, AGI has expanded into 13 foreign markets, and its growing global presence led the company to be recognized with the U.S. Commerce Department’s Export Achievement Award in 2010.
AGI began exporting in the mid to late 1990’s. However by 2008, exports had become an integral part of its strategic plan. Matt Glenn, Manager of International Operations at AGI, together with the company’s senior management, first wanted to expand export opportunities in Europe and Asia by targeting foreign government and space programs. Although AGI already had strong business relationships in Europe, the company sought assistance on connecting with Asian partners and understanding the various business cultures in the region. AGI also needed to prioritize which markets to enter and address issues such as language customization and international training.
Matt Glenn, Manager of International
Operations at AGI
Glenn contacted the U.S. Commercial Service’s (CS) Philadelphia office to get guidance in drafting an export plan for Asia. The CS set up meetings for AGI with potential partners in the region, including Japan and South Korea. Glenn states “Since the U.S. Commercial Service had already made the key contacts and extended business invitations appropriate to the business culture of the country, our sales teams could focus more on the presentation and sale of our products.”
After its initial success in Asia, the company set up a subsidiary office in Singapore to serve as an Asian base from which they could do further business in the region. Having the Asian subsidiary would help AGI better communicate with its Asian partners and customers. CS Philadelphia worked closely with CS Singapore in taking AGI through the steps in setting up a foreign subsidiary.
AGI uses a dual selling strategy with the various countries it does business with. In some markets like the United Kingdom, the firm sells directly; while in other markets such as South Korea, AGI utilizes software reseller partners. In the next five years, AGI hopes to increase its international sales as a percentage of overall sales from the current 12 percent to a projected goal of 20-40 percent. “We’ve seen a direct impact on our international sales as a result of U.S. Commercial Service assistance,” Glenn said. “Jobs supported by exports at our company have increased from 6 to 11 in the past two years, and we foresee adding many more new jobs in the not-too-distant future as international sales continue to grow.”
Glenn says a key lesson AGI learned was the importance of choosing the right international partners. In the past, when the company met with international partners on its own, it was either a hit or a miss. However, through the CS, the firm was able to access potential pre-screened partners. “The Gold Key program is a very good way to ensure that when we add a partner to our network, it is one that is highly respected in the target country,” he adds. “After all, our partners are charged with the management of AGI’s global brand. Conversely, our partners want to know and trust that the U.S. company is a good long-term fit for their own business growth strategy.”
The CS global network of export professionals helped AGI overcome barriers by providing information on establishing overseas networks and operations, guiding the company in targeted marketing and advising them in areas such as intellectual property. Glenn’s advice to other U.S. exporters: “Don’t just strike out on your own, take advantage of the U.S. Commercial Service. They are familiar with the ways of doing business in your market destination and know how U.S. companies can succeed there. It’s saved us valuable time and resources.”
Creating a formal strategic export plan has been crucial in setting up AGI’s international operations, helping get top management buy-in for long-term export goals, and helping the firm anticipate future resource needs. For example, Graziani, AGI’s CEO and co-founder, believes strongly that part of the strategic plan is to “create high quality and high-tech jobs” as foreign sales increase.
Glenn also recommends participating in trade missions, having participated in several in the past. He states, “For small to medium-sized businesses like us who are looking to expand into a large diverse market, participating in a trade mission can be very worthwhile. During trade missions to South Korea and Singapore, the U.S. Commercial Service set up one-on-one meetings with potential customers for us and provided briefings on specific market opportunities. Recently we participated in an aerospace trade mission to Brazil, which led to making a sale worth more than $100,000.”
With these lessons in mind, AGI is excited about future business prospects with Brazil and India, and considers Russia a possible new market.
Here are some tips on exporting to new markets