BEST PRACTICES FOR BUILDING YOUR DATA-DRIVENFDI STRATEGY10

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ContentsI N T R O

1 . L O O K A T T H E B I G P I C T U R E

2 . E X E R C I S E S T R A T E G I C E M P A T H Y

3 . U N D E R S T A N D C U R R E N T T R E N D S

4 . K N O W W H O Y O U A R E

5 . R A N K Y O U R S E L F A M O N G Y O U R C O M P E T I T O R S

6 . R E C O G N I Z E W H A T Y O U ’ R E G O O D A T

7 . I D E N T I F Y T H E R I G H T T A R G E T S

8 . S E N D T H E R I G H T M E S S A G E

9 . D O N ’ T F O R G E T T H E B A S I C S

1 0 . A N D F I N A L L Y . . . W O R K S M A R T E R N O T H A R D E R

R E A D Y . S E T . A T T R A C T .

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Sources: SelectUSA, FDI Fact Sheet

International Trade Administration,

US Dept of Commerce

DID YOU KNOW?

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With increasing globalization and ever-increasing access

to data, you’ve got the tools at your fingertips to build a right-sized FDI attraction program that supports your community’s growth and development objectives.

AND WHY WOULDN’T YOU?

Foreign Direct Investment is a critical driver of economic growth for developing and advanced economies. On the surface, new investment by foreign firms typically means job growth and expansion of the corporate tax base. These are good things. More importantly, an injection of new capital can have other positive impacts. Those impacts often include new technologies, new talent and expanded market access that can strengthen cluster development, enhance productivity and lead to increased competitiveness for your region.

So what are the best practices you can put to work

building your FDI attraction program?

So, your region wants a piece of the global FDI pie...

FDI into the US:

• supports 6.8 million direct jobs

• supports 5.9 million indirect jobs

• contributes $57 billion in innovative R&D

FDI into Canada is responsible for 1 in every 8 jobs.

Sources: Stats Canada

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Look at the Big Picture.

Before you dive in, it’s essential to understand the national context for FDI attraction. Understanding national development goals and clearly articulating how your jurisdiction or agency’s objectives align with those goals is an essential first step. Creating a clear policy statement that summarizes the relationship between your organization, its FDI goals and national development priorities quite literally ensures that you’re all on the same page. This alignment provides the necessary clarity of focus that will shape everything you do.

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In a nutshell, this means being able to walk a mile in the shoes of your target investors. To do this requires research and investigation to understand their

motivations and constraints. It means doing your homework!

• What pressures are they currently experiencing? • What issues do they face that might influence their

investment decisions?

• How can they mitigate risk and enhance their bottom line?

Empathy in this context gives you the ability to speak the language of your prospective investors and articulate how your offering value proposition creates a solution that supports their growth needs.

Exercise Strategic Empathy.

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Understand Current Trends.

An effective strategy will take advantage of existing strengths. You’ll need to identify which industries in your region are accounting for the most significant share of current investment.

• Where are these investments coming from?

• How does your region’s performance compare to national trends?

• Is your region’s share of FDI inflows growing or shrinking?

• Why are you competitive?

Either outcome can give you important insights about your competitive position that will ultimately help you to be more strategic in your targeting efforts.

It’s important to also look beyond trends impacting just FDI specifically. An in-depth understanding of how broader national and global economic and business trends play out at the local level is essential. This sets the stage for a community to facilitate the growth of its existing economic base, attract external companies to invest locally, and foster the creation of new businesses in emerging industries and industry segments.

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Know Who You Are.

Your prospects need specifics. It starts with an inward focus and one of the best ways to do this is to conduct a SWOT Analysis. The SWOT Analysis is a familiar tool to economic developers. In the context of building an effective FDI Attraction Strategy, it provides foundational information about the Strengths, Weaknesses, Opportunities and Threats that will impact your jurisdiction’s ability to successfully compete for global investment.

A SWOT ANALYSIS FOR FDI ATTRACTION

A SWOT analysis is a dynamic assessment that allows you to evaluate the investment characteristics of your city, county, region or state/province and identify industries that will find your location attractive. It considers strengths and weaknesses in the context of characteristics that are important to prospective investors. Factors such as:

• Workforce costs and availability• Business climate• Infrastructure• Availability of natural resources A SWOT analysis also considers upcoming developments that will impact future competitiveness. A reliance on data only would miss out on valuable insights that can be gleaned from stakeholders “on the frontlines”

of business and economic development. Conversely, basing the analysis wholly or mostly on stakeholder impressions runs the risk of being too anecdotal and over-emphasizing participating stakeholders’ individual industries or functional areas.

WHO SHOULD BE THERE?

Your SWOT Analysis should attempt to capture the insights of those stakeholders who are both impacted by and have an ability to influence the investment characteristics of your location.

These include:

• Leading private sector executives representing a variety of industries; including both foreign and domestic investors

• Senior public-sector officials from relevant ministries

• Senior economists and academics from local educational institutions

• Representatives of research institutions in the region

• Business Service Providers

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Rank Yourself Among Your Competitors.The best strategies are data-driven and offer a thoughtful approach to both targeting and positioning. Positioning is the process of establishing the image or identity of your community so that prospective investors will perceive it as a favourable investment location.

A Benchmark Assessment is a great place to start when developing your approach to positioning. Benchmarking allows you to understand how your region compares to other regions with similar economic and demographic profiles. It highlights those attributes that make your region stand out: “Highest number of STEM graduates in North America” and shines a light on areas for improvement: “Ranked 387th out of 400 for cost of doing business”.

When undertaking a benchmarking analysis, it’s essential to adopt the perspective of the potential investor and to assess what factors are most important to that particular industry. Low utility rates are important to large power consumers in the manufacturing sector, for example, but are less relevant to a software company whose primary challenge is a access to talent.

A Benchmark Analysis is comprised of

four principal components:

Determination of the factors or

economic indicators to be compared.

Selection of comparator regions

(typically based on similar economic and

demographic profiles).

Comparison of your location’s

performance relative to the comparator

regions and your competitors.

Identification of your Unique Value Proposition.

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Recognize What You’re Good At.

Don’t just jump on the Information Technologybandwagon because everyone’s doing it. Especially ifsome digging might uncover some interesting nicheopportunities. Specific and targeted opportunities aremuch more likely to capture the interest of an expandingcompany but without a data-driven analysis like a Target

Industry Analysis, your investment attraction effortsmay be little more than shots in the dark.

A Target Industry Analysis starts by developing a long list of potential industries. These include:

• Industries currently in your location and an overview of their upstream and downstream relationships

• Industries in competing locations and an overview of their upstream and downstream relationships

• Industries that are emerging in competing locations

• Industries that could emerge due to ongoing or proposed projects

• Wishlist of industries

• High-growth industries where FDI is important

By examining the industry structure, key industry players and significant industry trends, you can begin to rank industries based on their compatibility with your location’s attributes. The Target Industry Analysis

also allows you to assess your likelihood of success in targeting certain industries by highlighting the extent to which your region is able to respond to that industry’s requirements. Perhaps most importantly, this analysis will allow you to assess an industry’s compatibility with your overall development goals.

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Identify The Right Targets.

Once you’ve zeroed in on your target industries, the next step is to find out where they are. Without a Regional

Cluster Analysis, it’s difficult to know where to start. Your strategy should seek to identify regional clusters or geographic concentrations of interconnected companies relevant to your target industry.

Healthy growth clusters should demonstrate: • Some existing concentration of industries

• An increasing trend toward a greater concentration of industries

• Strong job growth over several years

• Growth in the number of businesses in the region

Pay special attention when you see signs of increasing salary growth. High levels of salary growth can be an indicator of eroding margins and more importantly, an increased openness to considering relocation. Consider also leveraging some of the available tools that can assist your efforts.

Gazelle.ai is an industry-leading business intelligence

and investment attraction platform that supports the targeting process. Among its many features is a heat-mapping function that can show you exactly where the greatest concentration of companies in

your target sectors are located and which of those are demonstrating important growth signals like salary growth and growth in number of establishments. If you don’t know where you’re going, any road will take you there. In an environment of limited time, resources and travel budgets, an effective FDI Strategy needs to take you directly to the source of your best opportunity for investment.

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Send the Right Message.

A Value Proposition shouldn’t be based on a cute sound bite or the gratification of political leaders. In the context of FDI attraction, a value proposition needs to speak directly to prospective investors and answer the question, ‘Is this the right jursidiction to grow my business?’ What matters to investors will vary by industry and by geographic location. Regular Value Proposition

Analyses are essential to ensure that your message is relevant and provides the right information to the people who need to hear it most.

Your location’s value proposition should be customized to the specific industries you are trying to attract. Building on the outcomes of the Benchmark Analysis, it delivers specific and quantifiable benefits: “Number 5 in the U.S. for productivity.” “Ranked 1st for percentage of employees with advanced degrees.”

Before launching your Value Proposition, it’s important to test it. Local industry leaders, academics and business service providers can validate that your messaging and confirm that it addresses the things that matter most to the industry. It’s especially important to speak with recent investors to understand what influenced their decision to locate in your jurisdiction.

There’s little point in expounding on the benefits of low commercial lease rates, if what really matters is access to an international airport.

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Don’t Forget the Basics.

If a site selection consultant or prospective investor needs to click through six pages of your website to find the information they need, chances are they’re going to move on to the next site where the information is more readily available. If investment attraction is

important to your organization, your website needs

to reflect that. A website that caters to an internal, community audience may not be the best tool for communicating with prospective investors.

At a minimum, your website should feature the types of information most often sought by site selection consultants and prospective investors.

This includes:

• Availability of buildings and sites

• Business costs

• Corporate tax rates

• Demographic profile

• Educational institutes and program concentration

• Energy availability

• Incentives

• Existing industry clusters

• Infrastructure

• Logistics

• Proximity to major markets

• Success stories

• Workforce attributes

Whenever possible, provide a real, human contact. Nobody wants to talk to ‘info@’ . Give them someone real like ‘IT Sector Specialist - Charlie Smith, charlie@community.org ‘.

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And Finally…Work Smarter, Not Harder.In our modern data-driven investment attraction world, you need to leverage tools that give you a competitive edge. That’s where Gazelle.ai comes in. This breakthrough platform combines artificial intelligence and big data to identify growing companies best suited to your region. Aside from identifying confirmed expansion projects, Gazelle.ai helps prioritize your targeting strategy by giving you an instant read on how likely your targeted companies are to expand.

Gazelle.ai’s proprietary “G-ScoreTM” analyzes hundreds of diverse growth signals to predict those companies most likely to expand – meaning that instead of waiting for a project to hit the news, you can get there first.

The platform also identifies growth cluster “hot spots” and offers a suite of features to help engage when it’s time to meet with prospects. These features include industry profiles with live industry news, KPIs, top import and export destinations, value-chain

ecosystems and company specifics like real-time

news, decision-maker bios, corporate affiliations,

international locations, and VC funding and

acquisitions and industry insights.

When it comes to engaging investors, Gazelle.ai offers a one-stop platform to complete that all-important pre-meeting homework.

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In the world of investment attraction, we all want a piece of the FDI pie. Adding Gazelle.ai to your Economic Development tool kit will ensure that your community is in a great position to get its fair share.

Gazelle.ai is a great fit for organizations doing FDI or any type of investment attraction. The platform was designed from the ground up for economic developers to support strategy development, lead generation and engagement. But you can’t really understand the power of Gazelle.ai until you’ve given it a try.

Ready. Set.Attract.

START YOUR FREE TRIAL

Steve founded ROI Research on Investment in February 2003.

As President of ROI, Steve led the growth of the company

from a two-person start-up to a Profit Magazine “Hot 50” company, ranking as Canada’s 26th fastest growing

company in 2007. In 2008, Steve was recognized as a Finalist in the Ernst & Young International Entrepreneur of

the Year Competition.

Steve has become a thought leader on best practices related

to investment prospecting, business retention and expansion,

as well as advanced lead nurturing and engagement

techniques.

ROI Research on Investment © 2019

Gazelle.ai © 2019

Since 2015, Steve has been leading an ambitious R&D effort to harness the power of big data and artificial intelligence for business and economic development. Following 3 years of development,

Gazelle.ai was launched in September 2017 and has since become the fastest growing AI-powered BI platform.

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