Expanding your company’s outreach has a great number of advantages. It can increase your business’ competitiveness, it broadens your consumer base, and ultimately will increase your profits. But there are also a lot of things that can go wrong when an expansion initiative fails, bankruptcy being one of them.
In order to expand into international markets effectively, one must understand domestic and global economics and the intricacies of international markets.
You also need to have a plan. Any kind of business initiative, especially one as big as this, takes time. Having a plan in place will ensure that you are meeting your goals, but also aren’t cutting corners. While this is by no means a step-by-step process, hopefully by keeping these things in mind, your business should be on its way to a successful expansion.
Business Targets
Before you start doing any work towards expansion, you need to make sure that your business is ready for it. Can your business afford overseas expansion? First, look at how your business is performing domestically. Are you making a consistent profit and meeting consumer demand effectively? What do future financial prospects look like for your business domestically?
Then you need to research all the costs associated with overseas expansion. It will take time for you to see profits, so you need to be prepared for how much money this will cost you with a very delayed return if all goes well. There will be up-front costs as well as ongoing costs. Your money will also be spent in more avenues compared to now. Once those costs are factored against your yearly profit, you need to consider whether your business can truly afford this.
Research
The next step is to do as much research as humanely possible, and then to do even more research after that. This is not a transaction; it is important to fully understand the region or country you will be marketing to. All the research that you did into your domestic market needs to be done into the international market you are hoping to expand to.
You need to research which market to enter, and how your chosen market relates to your already existing business practices. This new market will be socially and culturally different from yours, and they may even speak a different language. You also need to be aware of the currency exchange, their inflation rates, unemployment rates, their laws around taxing, benefits and employment, and the financial and political steadiness of the country you wish to expand into.
In addition, you need to understand their Gross Domestic Product (GDP), which is the “value of goods and services purchased in an economy” (Harvard Business School Online). If their GDP is growing and how fast, in relation to their population growth is important as well.
Finally, it is strongly advised that you learn about the successes and failures of the businesses who have tried to expand into the international market before you. Why did Target fail when trying to expand into the Canadian market, but Walmart flourishes? Learning about the failures and successes of other businesses will help inform your own plan moving forward.
First steps
Now it’s time to start acting towards putting your plan into place. The first thing you need to consider is whether you plan to build your own teams from the ground up or find existing international teams to partner with. In most cases, partnering is recommended for long-term success.
International partners already have a very deep understanding of the market you’re trying to target. A partner will already be aware of successful marketing strategies you need to adopt as well as the needs of this new consumer base. They will understand the language and cultural differences of this consumer base and can help you manoeuvre through these differences effectively.
A few other things to start working towards are, connecting effectively with people in different time zones and using reliable technology, re-assessing your recruitment tools for an international job market, creating a brand standard and adapting your marketing strategy for this new market.
Lauren Schwartz | Staff Writer
