Do You Want a Chinese or Indian Fender?

Fender Musical Instruments Corp’s announcement that they will seek an IPO to raise cash to pay down senior debt is not so newsworthy. The other intended uses of proceeds are, however, very interesting. Fender is looking ahead to emerging market growth as a source for sales to take the company from the $1BB annual revenues level. China and India are warming to guitar music and Fender wants to promote electric guitars to all who will jump on the bandwagon.

Fender was sold  by its founder to Columbia Records in 1965 and then it was purchased by current ownership in 1985. Currently, 47% of sales come from outside the United States and are distributed among 85 countries. Gibson is a major competitor on the new guitar front; resellers like eBay on the used. The brand legacy in rock ‘n roll is ingrained in the American pop culture, with musical icons like Eric Clapton counted among enthusiasts. In fact, a Clapton Stratocaster sells for $2,000+. As emerging markets embrace capitalism and portions of Western culture, consumer products companies like Fender want to make sure they explore market opportunities.

This pattern brings up an interesting question–how has your business embraced globalization, and to what degree? Are emerging markets (including the “BRIC” nations of Brazil, Russia, India and China) on your radar? How might they become more germane to your business strategies? Many readers may have seen the “Shift Happens” slideshow what trumpets the rate of change in our world, the shifting balance of economic power, and the surge in education in countries that did not used to be democracies. One of the sure-fire take-aways from the slideshow should be that we need to embrace new paradigms for almost every area of life if we are to remain competitive.

What types of innovation and change are you contemplating? Even with a solid history of selling Telecasters and supplying the like of Jimi Hendrix with musical equipment, Fender continues to push the envelope. Acquisitions of other brands including musical instrument accessory distributors, launching of a new handcrafted guitar brand, and co-branding deals with Apple and HardRock Cafe all are indicative of a commitment to continuously change the competitive landscape.

Again, are most of us using an old wineskin, or do we embrace new opportunities–even seek them out? How bold are you in the strategic moves you are contemplating right now? Think purposefully about whether your business model could use some innovative approaches. Determine to do whatever it takes to create value–you will be so glad you did!

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