One of the key components of achieving business success is consistent focus on market expansion. In this era of high competition, it is important to come up with the right strategies and goals for expanding your business beyond its current borders if you want to achieve sustainable long term growth of a global scale. However, for your expansion efforts to bear fruit, you will need a solid action plan. This article discusses five such strategies that will help you in achieving successful international market expansion.
What is International Market Expansion?
International market expansion, also called global expansion, refers to taking your business operations to a new country. It is not merely investing in nations other than the home country of the company. Rather, it refers to setting up a legal entity in a foreign land and conducting business from there.
5 Strategies for International Market Expansion
Once you are sure about taking your business overseas, you will need some solid strategies to be successful. Since various countries have different ways of doing business, along with a specific sets of rules, it is imperative that your strategies are tailored to your business. What works in your home country headquarters most likely won’t be effective in another place.
Keeping that in mind, the following are five tips that can take your international market expansion plans to the next level.
1. Look for Partners
One of the tenets of an effective international business is forming strong and lasting partnerships – both with internal and external stakeholders. While venturing into an unknown market, it is prudent to check with existing team members whether they have any valuable experience of that country or market that can be shared with you. This will help you to have a strong idea of the characteristics of the target international market beforehand. Through such internal partnerships, you can strategically assess the existing competition, form a network, and seek out suppliers and customers using existing trusting relationships.
Equally important is to have external partners. Forming a partnership with a local company can give you much-needed leverage as a new entrant into the market. For example, the Swedish multinational IKEA carries out its business across the globe by partnering with the local companies in most places.
2. Give it Time
Like any good thing, international market expansion takes time. According to the Harvard Business Review, for most companies expanding globally, it usually takes a decade to see a modest growth in their revenues.
Hence, to see your company thriving in an international market, you will have to be patient while implementing your plans. Success will not come overnight. However, with consistent efforts over a period of time, your business will gain traction and you should see the desired outcome. Keep in mind that any international market expansion represents a long-term investment and thus needs enough time to show results.
3. Test the Waters
Diving into global expansion without knowing the target market is never a good idea in business. Hence, before you decide to invest a fortune to create a subsidiary in a foreign location, it is wise to have tested the market.
One way of doing this is by opting to work with a Professional Employer Organization (PEO) or Employer of Record (EOR), who serves as your local legal entity to carry out business. This way you can start working with local partners to deliver or sell your products or services to customers in the chosen country of operations. Conducting business in this manner will help to gain a fair amount of knowledge about the competition as well as the customers, and will help you decide whether investing in a subsidiary could represent a good ROI.
4. Keep an Eye Out for Local Talent
When foraying into a new country to do business, one of the key success factors is hiring the right talent. This is because each society has its own set of unwritten rules about what is acceptable and what is not and it is imperative that companies abide by them. Hiring local people to work for your business thus becomes essential for it to thrive in the new environment. Hiring locally also makes it easier to connect with potential customers and creates trust in the market.
For this reason, when you operate in a new country be sure to tap into the local pool of talent for hiring people, especially in customer-facing roles like sales people.
5. A Strong Domestic Market
The entire activity of market expansion into international spheres makes business sense when you have a strong foothold in the domestic market. If your product or service is doing poorly in your home country, it might not make much sense to expand globally without solving existing problems.
Often, business owners falsely hope that taking an unsuccessful product and selling it internationally will give a boost to the failing business domestically. However, the reality is far from it. The foundation must be strong for your business empire to expand. Hence, take time to secure your present business before taking the plunge into global market expansion.
Where Next for Market Expansion?
International market expansion is a decision that cannot be taken lightly under any circumstances. There are a number of legal, financial and strategic factors that you must carefully evaluate before taking this step. That said, once you are sure of your intention to expand, following these five strategies will set you on the right path.