Creating an investment promotion strategy

An investment promotion strategy is the map that will guide your agency to the goals it has established. Goals such as attracting ten companies or 20 million dollars of investment cannot be reached simply by keeping busy. Activities such as producing brochures, holding investment conferences, and hosting site visits must take place within a coherent plan if they are to be effective.

This plan should begin with an understanding of what the location can offer companies and how that compares to competing locations within the region or elsewhere. In other words, what can the location "supply" to potential investors? What characteristics or attributes does it have that will prove attractive to certain types of industries? The next step is to identify those industries and sectors, and the likely home countries of potential investors within these industries and sectors that are likely to be attracted to the location. What and where is the "demand?"

Once you have identified the industry sectors that are most likely to be attracted to your location’s attributes, you need to determine the geographic focus of your investment promotion activities. Which countries have the greatest number of firms in your targeted industry sector? Are you going to focus on firms in one country or in several? In one region, or in several? At the end of this process you will have identified a discrete number of industry sectors in a select number of countries that will be the targeted focus of your promotional activities.

The IPI (investment promotion intermediary) also has to make predictions about the location’s future potential to attract investment. Investment promotion is a dynamic process, because a location’s attributes relative to other locations are constantly changing as a result of both domestic developments and changes in the external environment. The IPI must anticipate the impact these changes − for example, improvements in education or infrastructure − will have on its ability to attract future investment, and should incorporate these into its targeting strategy.

Thus, a promotional strategy must not only focus on what industry sectors will be targeted in the near term, but it must also reflect what will be targeted in the medium term, and ideally in the long term, assuming certain improvements in the investment environment are made. At the same time, the IPI has to play its part in improving the location so that higher-end industries will consider it as an investment site.

The purpose of developing an investment promotion strategy is to identify those specific industry sectors in select geographic locations that are most likely to be attracted to your location. There are 3 steps to developing an investment promotion strategy:

Step 1. Assess Your Investment Needs and Potential:

In conducting a location audit, you will complete the following four steps:

· Identify Intermediary and National Development Goals: Your promotional goals need to reflect national development objectives to maximize the benefits you can derive from your promotional efforts.

· Examine FDI Trends and External Influences: Global and regional FDI trends will show you who is investing where, and why, and will help you identify potential industries to target.

· Undertake a SWOT Analysis: Analyzing your location’s strengths, weaknesses, opportunities, and threats, will give you a dynamic picture of your location’s current and future strengths and weaknesses as an investment location.

· Analyze Your Competitors: You can use the findings of your SWOT analysis to benchmark your location’s competitiveness as an investment location vis-à-vis your competitors.

Step 2. Target Industries and Geographic Sources of Investment:

To target industries and geographic sources of investment that are compatible with your location’s attributes, you need to complete the following tasks:

· Develop a Long List of Industries: Your initial list of possible industries to target should include industries already in your location; industries operating in competing or similar locations; a realistic “wish list” of desirable industries; industries where foreign investment is increasingly important; and industries that could emerge to take advantage of a proposed project.

· Analyze Industry Sectors: Analyze each sector’s structure, key players, and trends to assess the likelihood of future foreign investment and to understand what the industry looks for in an overseas location.

· Assess Industry Compatibility with Your Location: Each industry sector should be evaluated in terms of its compatibility with national development goals and the specific attributes of your location.

·Develop a Short List of Industries: By scoring each industry sector in terms of its compatibility, you can develop a short list of industries. This list should include as many sectors as possible without overburdening your available resources.

· Target Geographic Sources of Investment: The countries you choose will be determined by the industries you decide to target, and the size of your travel or overseas representation budget. Geographic proximity and historical and cultural ties may also play a role.

Step 3. Develop Your Marketing Strategy:

· The industry and geographic focus resulting from Steps 1 and 2 will require changes in your strategy, specifically:

· Adjust the Planned Promotional Approach: Different promotional techniques are needed for different companies. You need to identify the most effective approach for the companies you have targeted and adjust your promotional activities accordingly.

· Evaluate Organizational Functions and Responsibilities: Changing the organization’s promotional focus may require changes in division and staff responsibilities to implement these activities effectively.

· Evaluate the Agency’s Partnerships: you may need to develop new partnerships and emphasize others to reflect the new targeting focus. Assess the Budget Implications: Determine how much the proposed new mix of promotional activities will cost and how these costs can be covered.

Develop a Strategy Document: A 30−50 page strategy document should be developed that identifies (1) the sectors to be targeted in the short- and medium-term; (2) the geographic focus of the strategy; (3) the promotional approaches to be used; (4) the needed changes in the organizational structure and staff; (5) any needed changes in partnerships; and (6) the budget and funding for the next three years.

(Source: http://www.fdipromotion.com)